Warren Buffett appears to have become disillusioned with tech giant Apple’s stock even after the announcement of record quarterly operating profits and has halved its position.
Berkshire Hathaway, its corporate conglomerate, sold about 390 million Apple shares in the second quarter. That’s on top of the 115 million shares he sold from January to March, when the tech company’s stock price was up 23%. Buffett still owns about 400 million shares worth $84.2 billion, according to data compiled by Reuters as of June 30.
The second quarter of 2024 was the seventh consecutive quarter in which Berkshire sold more shares than it bought. Second-quarter profits from the company’s dozens of businesses rose 15 percent to $11.6 billion from $10.04 billion a year earlier. Nearly half of those profits came from Berkshire’s stable businesses. Its cash position after the sale rose to $276.9 billion from $189 billion three months earlier.
Buffett has long urged shareholders to ignore the quarterly gains and losses of Berkshire’s investments, which often result in outsized net profits or net losses. The company often lets cash pile up when it can’t find entire companies or individual stocks to buy at prices it considers reasonable. Its cash can also signal concerns about the broader U.S. economy, as many investors view Berkshire as a barometer of what’s happening in the country.
US government data on Friday showing slowing job growth and the highest unemployment rate since October 2021, led some analysts to project multiple Federal Reserve rate cuts beginning in September. But Berkshire’s yields on short-term Treasury bonds are expected to decline once rate cuts begin.
Berkshire is also using less cash to buy back its own stock, buying back just $345 million in the second quarter and none in the first three weeks of July. “We would love to spend it, but we won’t unless we think we’re doing something that has very little risk and can make us a lot of money,” Buffett said at Berkshire’s annual meeting on May 4, referring to Berkshire’s cash.
Since mid-July, Berkshire has also sold more than $3.8 billion worth of Bank of America shares, its second-largest holding. But the businessman remains a big fan of Apple because of the iPhone maker’s pricing power and loyal customer base. At the annual meeting in May, he said he expected Apple to remain Berkshire’s largest equity investment, but argued that the sale made sense because the 21% federal tax rate on profits would likely rise.
Buffett, 93, has led Berkshire since 1965, building it into a conglomerate with dozens of businesses, including Geico auto insurance, BNSF railroad, Berkshire Hathaway Energy, an eponymous real estate brokerage and Dairy Queen. Vice Chairman Greg Abel, 62, is expected to eventually succeed Buffett as Berkshire’s chief executive.
Source: Ambito
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