Warren Buffett keeps selling Apple stock to hoard cash. But why?

Simone Del Rosario:

What does the Oracle of Omaha know that’s making him dump stock in the world’s most valuable company?

Scratch that, the second most valuable company, because NVIDIA just edged above it.

Warren Buffett’s Berkshire Hathaway offloaded about a quarter of its stake in Apple over the summer, according to earnings reported Saturday.

It marks the fourth straight quarter of dumping shares of the iPhone maker, totaling 600 million shares sold so far in 2024.

And while Berkshire’s dumping stock, it’s stockpiling cash. Cash on hand grew to more than $325 billion at the end of the third quarter, up from roughly $277 billion at the end of Q2.

Buffett says the sale doesn’t mean he’s soured on Apple.

Warren Buffett:

We will have Apple as our largest investment. But I don’t mind at all under current conditions, building the cash position. I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.

Simone Del Rosario:

Still, Apple is its biggest holding at around $70 billion, down from $174 billion at the end of last year. Buffett’s other big dump was Bank of America, where he offloaded $10 billion worth of shares.

Should Apple take it personally? Buffett warned investors he’d be building up reserves this year. He said he doesn’t see a lot of cheap, high-quality equity opportunities, while the other factor is his expectation taxes on capital gains will soon rise.

Warren Buffett:

They can change that percentage any year. And The percentage that they’ve decreed currently is 21% and I would say with the present fiscal policies, I think that something has to give, and I think that higher taxes are quite likely.

Simone Del Rosario:

But Edward Jones analyst Jim Shanahan says it may be more personal than a future tax burden. As personal as the death of Buffett’s right-hand man.

Shanahan says, “The share sales began surely after the death of Charlie Munger. It just may be the case that Munger was always a lot more comfortable with Apple than Warren Buffett.”

But CFRA analyst Cathy Seifert said it’s more likely the stake in Apple was “starting to become an outsized percentage” of Berkshire’s portfolio.

Profits from Berkshire’s business were down 6% compared to last year, coming in at $10.1 billion, just missing expectations. Its stock hit all-time highs in September, briefly eclipsing a $1T valuation.