Why did Warren Buffett sell more shares of Apple?

Warren Buffett, legendary investor Berkshire Hathaway Inc. (NYSE: BRK.A) (New York Stock Exchange: BRK.B), has recently made a number of bold moves across the conglomerate’s portfolio..

The famous capitalist reduced the company’s share in Apple Inc. (NASDAQ:AAPL), selling about 100 million shares of Apple according to to Berkshire documents.

In total, this represents about 25% of Berkshire’s stake. Let’s dive in and take a look. Berkshire’s performance is shown next to Apple in 2024 in the chart below.

Why is Warren Buffett selling Apple shares?

If only we were a neuron located inside Warren Buffett’s investment cortex. One can only imagine the colosseum of knowledge available in the markets.

Without the benefit of that location—or a direct seat on Berkshire’s investment committee—we won’t know for sure why Buffett sold his Apple stake until the celebrity investor tells us.

Sales began after Apple announced its Fourth quarter earnings last weekrecording revenue growth of 6% to $95 billion.

In total, Berkshire has sold more than 600 million shares of the iPhone maker this year.

But this isn’t the first time Warren Buffett has cut Berkshire’s position in Apple. And this shouldn’t come as much of a surprise, given his language. at the annual general meeting to take profits while federal capital gains taxes remain lower.

And even after this massive sell-off, Apple remains Berkshire’s largest shareholding, worth nearly $70 billion.

But the conglomerate’s strategy adds to a slate of stock sales this month. includingding, sale Bank of America (New York Stock Exchange: BAK) during the quarter.

As a result of these sales, the company received a record $325.2 billion in cash held in U.S. Treasury bills of various maturities.

Is cash king? Or is cash junk?

The big question on everyone’s lips is what Warren Buffett’s actions signal for the broader financial markets. The investor has long said his favorite holding period is “forever,” but that’s not his only holding period.

While he has long admired Apple, selling such a large stake signals a move to build cash reserves for future opportunities.

Or it may be possible to hedge against what he perceives to be a high market value. Not to mention, Berkshire is essentially a huge insurance company.

According to CFRA Research, cash accumulation “involves thinking that excludes risk, and investors may be worried about what this means for the economy and markets.” Reuters.

Berkshire also has to contend with the fact that its investment environment is fairly narrow. This means its ability to use cash is limited without major acquisitions.

Stupid takeaway

Warren Buffett’s recent decision-making highlights the importance of a balanced portfolio. Even with Apple’s strong results, he decided to take some profits and shore up cash.

For Australian investors, Buffett’s move is a reminder not to rely too heavily on even the strongest stocks.

This could reflect broader caution and signal that Buffett is bracing for potential changes in the market. But time will tell what the celebrity investor has up his sleeve.

Berkshire’s Class B shares are up 28% over the past year.