There was a bit of a stir Saturday, May 4, when people looking at Berkshire Hathaway’s quarterly report noted that the value of its Apple stock holdings was down 22%.
Did that mean Warren Buffett was bailing on its biggest holding?
No, Buffett told shareholders attending the annual meeting of Berkshire Hathaway (BRK.A) and (BRK.B) in Omaha, Neb. on Saturday.
Why sell Apple?
But the number is a bit misleading. Berkshire reportedly did sell about 115 million Apple shares, about 13% of its stake. Based on the stock price, Berkshire’s Apple stake ended the first quarter with 790 million shares.
The transactions were likely spread out over the first quarter. Using Apple’s March 31 closing price, Buffett sold about $20 billion worth of Apple shares.
So, why sell at all? Basically, for tax reasons, Buffett said.
Apple’s shares had risen 48% in 2023.
Apple’s shares, however, fell nearly 11% during the first quarter of 2024. They’re up 7% since the end of March and 7.7% just since the end of April.
Berkshire is up 11% this year but down 5% so far in the second quarter.
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Berkshire Hathaway has been a shareholder of Apple since 2016 when the late Charlie Munger convinced Buffett it was a great stock to buy. Munger, Berkshire’s long-time vice chairman, died in late 2023.
The investment has been fantastically successful, and Buffett still believes deeply in Apple.
He predicted Apple stock will still be Berkshire’s biggest holding at the end of the year. And, he noted, Apple CEO Tim Cook was attending the meeting.
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Sometimes, it’s OK to pay taxes
Buffett also suggested that share sales may be tied to his view that tax rates may possibly be going higher to fund a ballooning fiscal deficit in the U.S.
Paying the taxes on selling Apple didn’t bother Buffett “in the least.”
More Warren Buffett:
And he added, “I would really hope with all that America’s done for all of you, it shouldn’t bother you that we do it —and if I’m doing it at 21% this year and we’re doing it a little higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year.”
Berkshire’s biggest holding
Apple remains Berkshire Hathaway’s biggest holding, representing about 40% of the conglomerate’s stock portfolio, which had a total value of about $335.9 billion at the end of the quarter.
At the end of 2023, the portfolio was valued at $353.8 billion, with Apple representing about 49% of the portfolio’s value.
Apple and stocks of four other companies represented about 75% of the portfolio’s value at the end of March. The others are American Express (AXP) , Bank of America (BAC) , Coca-Cola, and Chevron (CVX) . That’s down from 79% in December.
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