Warren Buffett’s Berkshire Hathaway reduced its massive Apple stake in the first quarter of the year, marking the second consecutive quarter that the conglomerate has trimmed its position in the tech giant. Berkshire’s stake in Apple was reported to be worth $135.4 billion, indicating about 790 million shares, which was a decline of around 13% in the stake. Despite the reduction, Apple remained Berkshire’s biggest holding by far at the end of the quarter. Buffett mentioned that the sale was for tax reasons following significant gains and also to avoid a higher tax bill in the future if tax rates were to increase to address the growing U.S. fiscal deficit.
Berkshire Hathaway’s interest in Apple grew after investing managers Ted Weschler or Todd Combs convinced Buffett to buy the stock years ago. Buffett had praised Apple, calling it his second-most important business after Berkshire’s group of insurers. However, speculation arose that the reduction in the stake was due to concerns about Apple’s valuation, as the stock had jumped 48% in 2023 during a market rally driven by large-cap tech shares. At its peak, Apple had accounted for 50% of Berkshire’s equity portfolio. Despite the sale, Buffett expressed confidence in Apple’s future and stated that it was “extremely likely” to remain Berkshire’s largest holding at the end of 2024.
Nevertheless, Apple recently faced challenges as it reported a decline in overall sales and iPhone sales, causing shares to drop more than 4% so far in the year. The tech giant aimed to revive growth by announcing a $110 billion share buyback program, the largest in the company’s history, which boosted confidence among investors. Even with the reduction in its stake, Berkshire Hathaway remained Apple’s largest shareholder outside of exchange-traded fund providers. Buffett’s decision to sell a portion of his Apple shares reflected his investment strategy and considerations around balancing the portfolio and potential tax implications.
In response to shareholder concerns raised at Berkshire’s annual meeting in Omaha, Buffett emphasized the importance of contributing to tax payments and the role of individuals and businesses in supporting the country through taxes. Despite selling a portion of the Apple stake, Buffett highlighted his commitment to America and affirmed that he was willing to pay taxes responsibly. The sale of approximately 116 million Apple shares was a strategic move by Berkshire to manage its portfolio and financial obligations effectively, considering potential changes in tax rates and future market conditions. Berkshire Hathaway’s investment decisions, including the reduction in the Apple stake, demonstrated its prudent approach to managing its holdings and maximizing returns for shareholders.
Overall, Berkshire Hathaway’s decision to reduce its Apple stake in the first quarter reflected Buffett’s objective of optimizing the conglomerate’s equity holdings and aligning them with changing market dynamics. While Apple remained a key investment for Berkshire, the sale of a portion of the stake indicated a strategic adjustment in the portfolio composition. Buffett’s rationale for the sale, including tax considerations and long-term financial planning, illustrated his prudent approach to capital allocation and risk management. Despite the reduction in the Apple stake, Berkshire’s confidence in the tech giant’s future prospects remained high, as reflected in Buffett’s endorsement of Apple as a significant holding in the company’s portfolio.
