Warren Buffett’s Billion-Dollar Blunder?
A Missed Opportunity of Epic Proportions
Warren Buffett’s Berkshire Hathaway made a bold move in the first half of 2024, slashing its Apple stake by a staggering 55%. But was it a wise decision? As Apple shares continue to soar, it appears Berkshire Hathaway may have left a whopping $23 billion in profits on the table.
A Record-Breaking Stake
At the start of 2024, Berkshire Hathaway held a massive 905.6 million shares of Apple stock, worth a staggering $174 billion. If it had maintained its position, that stake would be worth a mind-boggling $210 billion today. Instead, the conglomerate’s current Apple stake is valued at $84 billion, a significant drop.
The Great Sell-Off
So, what drove Berkshire Hathaway to trim its Apple stake by 13% in the first quarter and a further 389.7 million shares in the second quarter? The sales resulted in a missed profit opportunity of approximately $23 billion, according to calculations by Business Insider.
Apple’s Soaring Success
Since the second quarter, Apple shares have skyrocketed 10% to record highs around $232 per share, driven by investor excitement over Apple Intelligence technology. This innovative tech is fueling growth in hardware sales, leaving many wondering if Berkshire Hathaway’s decision was premature.
The Calculations Behind the Missed Profits
Using the average share price of Apple stock in the first and second quarters, Business Insider estimates that Berkshire Hathaway sold its 505.9 million shares at a weighted average price of about $186.15 per share. The difference between this price and the current Apple stock price reveals the $23.1 billion in missed profits.
A Brilliant Trade, Nonetheless
While it’s easy to focus on the missed opportunity, it’s essential to acknowledge that Berkshire Hathaway’s Apple trade will go down as one of its best in history. With an estimated average buy price of $39.59 per share, Apple shares have soared an impressive 485% since Berkshire started building its stake in 2016.
Buffett’s Visionary Move
What’s truly remarkable is that Berkshire Hathaway started accumulating its massive Apple stake when the tech giant was already the largest company in the world by market capitalization. Few investors, except for Buffett, foresaw Apple’s potential for further growth.
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