Warren Buffett cuts Apple stake as his cash pile hits record $325.2 billion
Investing legend continues to refrain from major acquisitions
by Alexandre Rajbhandari · Financial PostBerkshire Hathaway Inc.’s cash pile reached US$325.2 billion in the third quarter, a record for the conglomerate, as Warren Buffett continued to refrain from major acquisitions while trimming some of his most significant equity stakes.
Berkshire once again cut its holdings in Apple Inc., the Omaha, Nebraska-based company said Saturday in a statement.
The company first disclosed its stake in the tech giant in 2016 and had spent US$31.1 billion for the 908 million Apple shares it held through the end of 2021.
I don’t think Warren Buffett’s ever really been super comfortable with technology,Jim Shanahan, an analyst at Edward Jones
Buffett hinted at Berkshire’s annual meeting in May that the sales of Apple in the first quarter were partly motivated by tax implications, and that the tech giant would remain the largest investment for the Omaha, Nebraska-based conglomerate.
That’s still true, though Berkshire’s holdings are now valued at US$69.9 billion, versus US$174.3 billion at the end of last year, for a decline of almost 60 per cent. Buffett hasn’t disclosed his views on Apple since the annual meeting.
Apple is facing a raft of challenges, including a lack of meaningful growth for its signature iPhone. Last week, Apple told investors that it’s projecting low-to-middle single-digit sales growth in the December period, falling short of estimates for the crucial holiday season.
Sales in China have fallen, while domestic competitors there have gained ground. Regulators on both sides of the Atlantic are ratcheting up scrutiny over antitrust and competition concerns. And Apple has lagged behind its rivals in artificial intelligence. Last week, Apple rolled out AI upgrades for its iPhone, iPad and Mac computers but told customers the most anticipated features won’t be available until December.
“I don’t think Warren Buffett’s ever really been super comfortable with technology,” said Jim Shanahan, an analyst at Edward Jones.
“The share sales began surely after the death of Charlie Munger,” Shanahan said, referring to Buffett’s longtime business partner, who died in 2023. “It just may be the case that Munger was always a lot more comfortable with Apple than Warren Buffett.”
Cathy Seifert, a research analyst at CFRA, said Berkshire’s Apple stake was “starting to become an outsized percentage” of its overall portfolio. “I think it made sense to sort of lighten that exposure a little bit,” she said.
Net Seller
Berkshire reported US$34.6 billion of net share sales in the three months through September.
The company has struggled to find ways to deploy its cash pile, as Buffett has found market prices too high to find attractive deals. At the annual meeting, Buffett said Berkshire wasn’t in a rush to spend “unless we think we’re doing something that has very little risk and can make us a lot of money.”
Higher yields on cash holdings set “the bar a little bit higher for other opportunities,” Shanahan said.
Interest and other investment income has more than doubled at the conglomerate’s insurance business, reaching US$3.5 billion in the three months through September.
Buffett, 94, has used some of the cash hoard to repurchase some of its own stock, though even that had become costlier recently. Shares of Berkshire have gained 25 per cent this year, boosting its market value to US$974.3 billion. Its market capitalization eclipsed US$1 trillion for the first time on Aug. 28.
This past quarter, Berkshire declined to buy back its own stock for the first time since it changed its policy in 2018.
“I think investors are going to be disappointed by that,” Seifert said.
Operating Earnings
Berkshire’s operating earnings fell 6 per cent from a year earlier, to US$10.09 billion, as insurance underwriting earnings slumped. The company also recorded a US$1.1 billion foreign-currency-exchange loss during the quarter.
Earnings from underwriting at the firm’s collection of insurance businesses plunged 69 per cent, to US$750 million, versus US$2.4 billion a year earlier, driven by higher losses at Berkshire Hathaway Primary Group.
Berkshire estimated that the impact of hurricane Helene on its earnings this quarter came to US$565 million. Hurricane Milton is expected to result in a pretax hit of US$1.3 billion to US$1.5 billion in the fourth quarter.
While earned premiums grew at car insurer GEICO, they declined about 5.6 per cent across Berkshire’s reinsurance businesses. Seifert said this could signal that Berkshire is embracing a “risk-off” strategy this quarter.