Crypto legend Warren Buffett reduces stake in Apple as Berkshire Hathaway sells $51 billion in Q2
Investment magnet and Berkshire Hathaway (NYSE: BRK.A) founder Warren Buffett continues to reduce his stake in several blue-chip companies that have formed a bedrock of his portfolio for years. In this regard, technology giant Apple (NASDAQ: AAPL) is the latest to be affected, with Buffett selling a significant amount in Q2 2024. According to the earnings report for the just-ended quarter, Buffett cut his holdings in Apple by approximately $51 billion.
As of the end of Q2, Berkshire Hathaway’s investment in the firm stood at around $84.2 billion, down from $135.4 billion at the end of Q1. This substantial reduction occurred despite Apple’s strong performance, with its stock increasing 22% during the quarter. Therefore, if Buffett had not sold any Apple shares, Berkshire’s position would have been valued at approximately $166.3 billion, indicating that nearly half of the Apple stake was divested.
This major divestment has contributed to Berkshire Hathaway’s record cash reserves, totaling $277 billion. Notably, Buffett’s cautious approach potentially reflects ongoing market uncertainty, opting to hold a significant amount of cash rather than staying heavily invested in a single equity.
Breakdown of Berkshire Hathaway’s Q2 earnings
The earnings report also highlighted Berkshire Hathaway’s investments in equity securities as of June 30, 2024, and December 31, 2023. The June 30 report shows a total cost basis of $88.453 billion with net unrealized gains of $196.418 billion, resulting in a fair value of $284.871 billion. In comparison, the December 31 report listed a total cost basis of $109.416 billion with net unrealized gains of $244.426 billion and a fair value of $353.842 billion.
The investment firm’s aggregate fair value remains concentrated in five companies: American Express (NYSE: AXP), Apple, Bank of America (NYSE: BAC), Coca-Cola (NYSE: KO), and Chevron Corporation (NYSE: CVX). Berkshire Hathaway’s profit for Q2 dropped to $30.3 billion, down from $35.9 billion in the same period of 2023. This decline suggests a decrease in operating earnings and an increase in paper profits on the company’s equity portfolio. Apple largely drove the portfolio gain for the quarter.
In contrast, Berkshire Hathaway’s after-tax operating profit surged 15% in the second quarter to $11.6 billion, driven by higher insurance underwriting profits and increased income from its substantial cash reserves.
Lowest stock repurchase
During this period, the company repurchased only $345 million of its stock, one of the lowest quarterly totals in several years, compared to $2.6 billion in the first quarter of 2024 and $2.2 billion in the fourth quarter of 2023. It is also worth noting that Buffett has intensified his selling spree recently, including a nearly $3 billion reduction in his stake in Bank of America.
Meanwhile, Berkshire Hathaway’s stock price has been affected by the recent general sell-off in the stock market. As of the close of markets on August 2, the stock traded at $428, with losses of nearly 1% over the previous 24 hours.
Hot Take
Warren Buffett’s decision to reduce his stake in Apple and other blue-chip companies signals a shift in his investment strategy amid market uncertainty. The substantial divestment, record cash reserves, and focus on cash holdings highlight Buffett’s cautious approach in volatile market conditions.
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