In the first half of this year, Warren Buffett (Trades, Portfolio), known as the "Oracle of Omaha," significantly reduced his stake in Apple Inc. (AAPL, Financial), selling nearly half (55%) of his holdings. Despite the massive sell-off, Apple's stock price has risen by 10% since then. This decision cost Buffett's Berkshire Hathaway about $23 billion.
At the beginning of 2024, Berkshire Hathaway held 905.6 million shares of Apple, valued at approximately $174 billion. Currently, these shares would be worth around $210 billion. However, by the end of the second quarter, Berkshire's Apple holdings had decreased to $84 billion.
In the first quarter, Berkshire reduced its Apple position by 13%, selling roughly 116.2 million shares. During the second quarter, it sold an additional 389.7 million shares. Apple's stock price has since increased by about 10%, fueled by investor excitement over the company's "Apple Intelligence" technology, boosting hardware sales. As of Thursday's market close, Apple shares rose 0.16% to $232.15, marking a 25.05% increase year-to-date.
Due to the unavailability of the exact selling price of Apple's shares, the calculations used the average stock prices from the first and second quarters. Berkshire sold approximately 505.9 million Apple shares at an average weighted price of $186.15 per share in the first half of 2024, resulting in an estimated $23.2 billion loss.
Buffett has not explicitly stated the reasons for selling Apple shares. However, he has mentioned concerns over the potential increase in corporate tax rates once the current tax law expires at the end of the year. In May, Buffett hinted at this during Berkshire's annual meeting, explaining that selling now at a 21% tax rate might be more favorable than at a higher rate in the future. Additionally, some investors believe Buffett's action was due to Apple's significant proportion, over 40%, in Berkshire's equity portfolio, prompting a reevaluation of holdings.
It's noteworthy that Buffett has been reducing stock positions, not just in Apple, while increasing cash reserves. As of mid-August, his cash reserves hit a record $189 billion, with consistent profit-taking from successful stocks over recent quarters.
Buffett has consistently sold more stocks than he bought over the last seven quarters. Apart from Apple, he has also aggressively sold shares of Bank of America, reducing Berkshire's stake to below 10% and cashing in over $10 billion.
