There was a bit of a stir on Saturday, May 4, when people watching Berkshire Hathaway's quarterly report noticed that the value of its Apple stock was down 22%.
Did that mean Warren Buffett was abandoning his largest stake?
No, Buffett told shareholders attending Berkshire Hathaway's annual meeting. (BRK.A) and (BRK.B) in Omaha, Nebraska on Saturday.
Why sell Apple?
But the figure is a bit misleading. Berkshire reportedly sold about 115 million Apple shares, about 13% of its stake. Based on share price, Berkshire's stake in Apple ended the first quarter with 790 million shares.
The transactions were likely spread throughout the first quarter. Using Apple's closing price on March 31, Buffett sold about $20 billion worth of Apple stock.
So why sell? Basically, for tax reasons, Buffett said.
Apple shares had risen 48% in 2023.
Apple shares, however, fell almost 11% during the first quarter of 2024. They are up 7% since the end of March and 7.7% since the end of April alone.
Berkshire is up 11% this year, but is down 5% so far in the second quarter.
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Berkshire Hathaway has been an Apple shareholder since 2016, when the late Charlie Munger convinced Buffett it was a great stock to buy. Munger, Berkshire's longtime vice chairman, died in late 2023.
The investment has been incredibly successful and Buffett still believes deeply in Apple.
He predicted that Apple shares will remain Berkshire's largest holding by the end of the year. And, he noted, Apple CEO Tim Cook was present at the meeting.
Sometimes it's okay to pay taxes
Buffett also suggested that the stock sales may be tied to his view that tax rates are possibly rising to finance a growing U.S. fiscal deficit.
Paying taxes on the sale of Apple didn't bother Buffett “in the least.”
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He added: “I really hope that with everything America has done for all of you, it shouldn't bother you that we do it, and if I do it at 21% this year and we do it a little higher percentage later, I don't think you'd really mind.” “Never mind the fact that we sold a little bit of Apple this year.”
Berkshire's largest holding company
Apple remains Berkshire Hathaway's largest 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 accounting for around 49% of the portfolio value.
Apple and shares 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 (baccalaureate) Coca-Cola and Chevron (CLC) . That's down from 79% in December.
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