Warren Buffett’s reasons this weekend for trimming Berkshire Hathaway’s massive Apple stake exemplify one of Jim Cramer’s primary rules of investing. Jim said Monday it looks like Buffett practiced a version of his ” discipline trumps conviction ” principle in selling a small chunk of Berkshire ‘s more than $143 billion stake in Apple and then explaining the move at the company’s annual shareholders meeting Saturday in Omaha, Nebraska. Apple will likely continue to be “our largest investment,” this year, Buffett said on stage. He heaped praise on the iPhone maker’s business and showed his conviction even as details in Berkshire’s earnings release implied a 13% reduction in the number of Apple shares owned. “I don’t mind under current conditions building the cash position,” the 93-year-old said, suggesting his belief that taxes will be going higher played a role in the sale. “I don’t think you’ll actually mind the fact that we sold a little Apple this year,” he added, showcasing his discipline to take some exposure off the table. Jim described Buffett’s overall Apple commentary as “definitely endorsing” CEO Tim Cook, who attended the Berkshire meeting. CNBC’s Becky Quick reported in a post on X that Cook spoke with Buffett about the Apple trim and was not bothered by it. “It’s a privilege to have them [Berkshire] as a shareholder,” Cook told Becky. The Club went through a similar situation with Apple earlier this year. As much as Jim likes Apple, he decided to trim it on Jan. 2 after it swelled to more than a 5% weighting in the portfolio due to a strong 2023. Sure, it raised cash and locked in profits. While his conviction in Apple never wavered, his discipline to keep any one position from getting too big in the portfolio won the day. Jim has said that trimming Apple did not go against his “own it, don’t trade it” mantra because when faced with choosing: discipline trumps conviction. More recently, Jim steadfastly stood by his “own it, don’t trade it” conviction as Apple shares went on a rough ride earlier this year. It paid off when Apple finally reported earnings last Thursday evening, and it turned out that all the concerns about terrible iPhone sales and China’s weakness were overblown. As icing on the cake, Apple also announced a $110 billion buyback, the biggest in corporate history. The stock — left for dead not too long ago in the mid-$160s — surged nearly 6% to more than $180 per share on Friday. The Club raised Apple’s price target to $220 from $205. Apple lost about 1% on Monday. The next big event for Apple will be its annual Worldwide Developers Conference (WWDC) next month. That’s when Cook and management are expected to talk about the company’s plans for artificial intelligence. Jim said Monday he’s looking forward to AI-integrated iPhones and the refresh cycle they would usher in. “I mean, I can’t imagine not wanting to get that phone if AI is in it,” he said. (Jim Cramer’s Charitable Trust is long AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024.
CNBC
Warren Buffett’s reasons this weekend for trimming Berkshire Hathaway’s massive Apple stake exemplify one of Jim Cramer’s primary rules of investing.
wiredfocus
