Berkshire Hathaway Inc.’s continued sales of Apple Inc. shares in the third quarter They left the conglomerate’s stake at a fraction of its size at the beginning of the year.
Berkshire reduced its stake in the iPhone manufacturer by approximately 25% during the period, after having reduced it almost by half in the second quarter. Apple shares gained 10.6% in the period ending September 30.
Warren Buffett hinted at Berkshire’s annual meeting in May that Apple’s first-quarter sales were driven in part by tax implications and that the tech giant would remain the largest investment for the Omaha, Nebraska-based conglomerate.
That remains true, although Berkshire’s holdings are now valued at $69.9 billion.compared to US$174.3 billion at the end of last year, which represents a decrease of almost 60%. Buffett has not revealed his views on Apple since the annual meeting.
Apple faces a number of challenges, including a lack of significant growth for its flagship iPhone. Last week, Apple told investors it expects low- to mid-single-digit sales growth in the December period.below estimates for the crucial Christmas season.
Sales in China have fallen, while local competitors have gained ground. Regulators on both sides of the Atlantic are stepping up scrutiny over antitrust and competition concerns. And Apple has fallen behind its rivals in artificial intelligence. Last week, Apple released artificial intelligence updates for its iPhones, iPads and Mac computers, but told customers that the most anticipated features won’t be available until December.
“I don’t think Warren Buffett has ever been really comfortable with technology,” said Jim Shanahan, an analyst at Edward Jones.
“Stock sales certainly began after Charlie Munger died,” Shanahan said, referring to Buffett’s longtime business partner, who died in 2023. “Munger may have always been much more comfortable with Apple than Warren Buffett was.” ”.
Another analyst suggested that Buffett’s Apple sales could be due to simple portfolio rebalancing.
Cathy Seifert, research analyst at Cfra, said that Berkshire’s stake in Apple was “starting to become an outsized percentage” of its total portfolio. “I think it made sense to lighten that exposure a little bit.”
Below are some other key takeaways from Berkshire’s third-quarter results:
Pile of cash
Berkshire’s cash pile has reached record levels, and the world’s most famous investor is still struggling to find ways to spend it. The company had $325.2 billion in cash at the end of the third quarter.
Buffett said at the annual meeting that the company was in no rush to deploy its reserve “unless we think we’re doing something that has very little risk and can make us a lot of money.”
net seller
Berkshire sold shares for a net total of $34.6 billion during the quarter and $127.4 billion since the beginning of the year. This is a much faster pace of divestitures than last year, when net sales totaled just $24.2 billion in 12 months.
No buybacks
Buffett even refused to buy back Berkshire shares, for the first time since the company changed its policy in 2018. It bought back $345 million of its own shares in the prior period and $1.1 billion a year ago.
Since then, Berkshire shares have risen in value about 25% this year, raising its market value to $974.3 billion.
Hurricane losses
Hurricane Helene’s impact on Berkshire’s earnings this quarter was $565 million.
Hurricane Milton is expected to have a pre-tax impact of between US$1,300 and US$1,500 million in the fourth quarter.
Operating profit
Berkshire Hathaway’s operating profit fell 6% from a year earlier to $10.1 billion, although a currency loss of about $1.1 billion in the period played a role.
Underwriting profits across the firm’s collection of insurance businesses fell 69% to $750 million, partly driven by losses in its primary insurance unit.
