Berkshire Hathaway’s Apple Stake Takes a Hit
Warren Buffett’s conglomerate, Berkshire Hathaway, has significantly reduced its stake in Apple Inc. over the past quarter, leaving the tech giant’s shares at a fraction of their original value. This marks a significant shift in Berkshire’s investment strategy, which has long been dominated by Apple.
A 60% Decline in Apple Holdings
Berkshire cut its Apple holdings by roughly 25% in the third quarter, following a nearly 50% reduction in the second quarter. Despite Apple’s 10.6% gain in the period ended September 30, Berkshire’s stake is now valued at $69.9 billion, down from $174.3 billion at the end of last year. This decline has left many wondering about Buffett’s views on the tech giant’s future prospects.
Challenges Ahead for Apple
Apple faces a range of challenges, including stagnant iPhone growth, declining sales in China, and increased regulatory scrutiny. The company has also struggled to keep pace with its rivals in artificial intelligence, an area where it has recently rolled out upgrades but delayed key features until December.
Buffett’s Tech Reservations
Some analysts believe that Buffett’s discomfort with technology may be driving the sale of Apple shares. “I don’t think Warren Buffett’s ever really been super comfortable with technology,” said Jim Shanahan, an analyst at Edward Jones. Others suggest that the death of Charlie Munger, Buffett’s longtime business partner, may have contributed to the shift in investment strategy.
Portfolio Rebalancing
Cathy Seifert, a research analyst at CFRA, offers an alternative explanation: “Berkshire’s Apple stake was starting to become an outsized percentage of its overall portfolio… it made sense to sort of lighten that exposure a little bit.”
Berkshire’s Cash Pile Grows
Berkshire’s cash reserves have reached record heights, with the company holding $325.2 billion in cash at the end of the third quarter. Despite this, Buffett remains cautious about deploying the funds, seeking opportunities with low risk and high potential returns.
Other Key Takeaways
- Berkshire sold a net $34.6 billion in equities during the quarter, and $127.4 billion since the beginning of the year.
- The company declined to buy back its own shares for the first time since changing its policy in 2018.
- Berkshire’s shares have gained roughly 25% this year, boosting its market value to $974.3 billion.
- The impact of Hurricane Helene on Berkshire’s earnings this quarter was $565 million, with Hurricane Milton expected to result in a pretax hit of $1.3 billion to $1.5 billion for the fourth quarter.
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