Warren Buffett's Berkshire Hathaway announced over the weekend that it had slashed its Apple stake by half. The revelation caused a dramatic decline in Apple's stock price on Monday, reflecting the broader global sell-off spurred by concerns of an economic slowdown.
Berkshire Hathaway's recent earnings filing disclosed that its Apple holdings were valued at $84.2 billion at the end of the second quarter, indicating that the firm had reduced its stake by more than 49%. This significant reduction from the tech giant, which had been one of Buffett's most prominent investments, led to Apple shares dropping over 5% on Monday, having fallen as much as 10% earlier in the day.
The 93-year-old Buffett, renowned for his strategic investment decisions, has been on a notable selling spree, offloading more than $75 billion in equities in the second quarter alone. This spree has increased Berkshire's cash reserves to an unprecedented $277 billion, an all-time high for the conglomerate. Notably, Buffett also began selling shares of his second-largest holding, Bank of America, in July.
Buffett had previously sold 13% of his Apple stake in the first quarter, citing tax-saving motives due to anticipated hikes in U.S. tax rates to address the fiscal deficit. However, the magnitude of the second-quarter sale suggests that factors beyond tax considerations influenced the decision.
Berkshire Hathaway's initial investment in Apple began in 2016, under the guidance of Buffett's investment managers, Ted Weschler and Todd Combs. Over the years, Buffett grew increasingly fond of Apple, significantly expanding the stake and often referring to the tech giant as the second-most important business in Berkshire's portfolio, following his array of insurance companies. At its peak, Berkshire's Apple holding accounted for nearly half of its equity portfolio, prompting speculation that the recent sell-off could be a strategic move to rebalance the portfolio.
Despite the recent sell-off, Apple's stock had shown strong performance in the second quarter, climbing 23% to a record high amid renewed optimism about its artificial intelligence capabilities. The company's recent earnings report also surpassed Wall Street expectations by nearly $2 billion, although it fell short in China.
Apple declined to comment on Berkshire's recent decision to reduce its stake.
