Is Apple losing its magic? Warren Buffett sells 10 million shares

Is Apple losing its magic?  Warren Buffett sells 10 million shares

Since Berkshire Hathaway entered Apple in 2016, the stock has seen strong growth, leading to a significant increase in exposure. And this week it was reported that Warren Buffet decided to sell some of it. This move can be interpreted as an attempt to diversify his portfolio and reduce dependence on a single company.

However, it is worth noting that the sale of Apple shares does not indicate a loss of confidence in the company, since Berkshire Hathaway still owns more than 905 million shares, which represent half of its portfolio. In addition to Apple, the largest positions are Bank of America (10%), American Express (8.2%), Coca Cola (6.8%), Chevron (5.4%) and Occidental Petroleum (4.2%) .

How is Apple doing?

Let’s look at your graph:


Apple is 9% below its all-time highs and remains the most valuable company in the world. However, despite its innovations, it has faced pressure from several fronts, including competition in the smartphone market and concerns about market saturation.

Let’s look at the following chart, which shows how Apple is doing in relative terms against the S&P 500:


If the chart goes up, it means that Apple is doing better than the market (S&P 500). And vice versa. What can be seen is that since June of last year Apple has been weakening in relative terms, and set a new low for the last 11 months.

For now, prices seem to indicate that Apple does not have the same strength as before. Furthermore, the fundamentals are also not as strong as in previous years. Apple recently reported an increase in sales during the last quarter, after having fallen for four consecutive quarters, marking the longest slowdown since 2001.

Additionally, it faces challenges in China, where its sales have declined, suggesting increased competition in the market. Recently, in an attempt to revitalize its position, Apple has launched its first new product in almost a decade: the Vision Pro mixed reality headset. Although the company presents them as the future of computing, for now they are expensive and their usefulness is limited. limited.

Let’s remember that Apple’s valuation is not very attractive either. If we value the company according to its price-to-sales ratio, we observe that it is not “cheap”. On the contrary, it is close to its historically high levels.


Therefore, be careful with Apple. As always, prices rule.

Note: The material contained in this note should NOT be interpreted under any circumstances as investment advice or a recommendation to buy or sell a particular asset. This content is for educational purposes only and represents the opinion of the author only. In all cases it is advisable to seek advice from a professional before investing.

Source: Ambito

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