(Bloomberg) — Berkshire Hathaway Inc. cut its stake in Apple Inc. by about 50% as part of a massive second-quarter selling spree that left billionaire Warren Buffett’s cash pile at a record $276.9 billion.
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In all, Berkshire Hathaway sold $75.5 billion worth of shares on a net basis during the period, the Omaha, Nebraska-based company said Saturday. Operating profit rose to $11.6 billion, compared with $10 billion in the same period a year earlier.
Buffett has been selling stocks as the S&P 500 surged to a record high in mid-July, though the index has fallen in each of the past three weeks on concerns that the AI euphoria has gone too far. On Friday, weak labor data underscored the risk of an economic slowdown, and the S&P 500 fell 1.8%.
“We can conclude that this is another sell signal,” said Jim Shanahan, an analyst at Edward Jones who covers Berkshire. “This was a much higher level of selling activity than we expected.”
Buffett’s Berkshire Hathaway also cut its stake in Bank of America, its biggest bet on banks. Berkshire Hathaway has reduced its stake in the bank by 8.8% since mid-July, according to data the company filed late Thursday.
Berkshire Hathaway has struggled to find ways to deploy its mountain of cash as stock prices have soared and deal activity has dried up. At the company’s annual shareholder meeting in May, Buffett said he was in no hurry to spend it “unless we think we’re doing something that’s low risk and can make us a lot of money.”
Berkshire has recently used share buybacks as one way to deploy cash, but even that has become more difficult in recent months as its stock has hit record highs. Berkshire repurchased about $345 million of its own shares during the quarter, the least amount since the company changed its buyback policy in 2018.
Since Berkshire first disclosed its Apple stake in 2016, Buffett has used the gains to rack up a huge paper profit. Berkshire spent $31.1 billion on just the 908 million Apple shares it held through the end of 2021. His roughly 400 million Apple shares were now worth $84.2 billion at the end of June.
Buffett told a shareholder meeting in May that Apple was “better” than two other companies he owned, American Express and Coca-Cola. He said at the time that Apple would likely remain his largest stake, citing tax issues as the reason for the sale, “but I don’t mind at all, under the circumstances, building up the cash position.”
Berkshire’s share sales “are likely aimed at avoiding higher capital gains taxes, and dividend harvesting may continue in some long-term situations,” Bloomberg Intelligence analysts Matthew Palazola and Eric Biddle said in a note Saturday.
Cupertino, California-based Apple Inc. said this week that its sales to China fell 6.5% to $14.7 billion in the third quarter, missing Wall Street expectations of $15.3 billion.
The results have raised concerns that Apple is losing ground in one of its most important overseas markets. Apple faces stiff competition in the region, the government has imposed restrictions on the use of foreign technology in some workplaces, and economic growth in China has deteriorated.
Apple has blamed much of the decline on the effects of a stronger dollar, saying its core business in China is actually healthier than before. Three months ago, executives said the slowdown was not due to weak iPhone performance but to weak sales of other products.
Apple shares have soared this year, helped by investors’ hopes that new AI technology will help boost sales. But on July 28, Bloomberg News reported that Apple’s upcoming AI features will arrive later than expected, missing the initial rollout of upcoming iPhone and iPad software fixes but giving the company more time to fix bugs.
Edward Jones’ Shanahan said the scale of Buffett’s Apple stock sales in the second quarter suggests the legendary investor may not be done yet.
“I thought selling his remaining stake in Apple would be a long shot, but that doesn’t seem that far-fetched anymore. I don’t think zero is impossible now,” Shanahan said.
–With the assistance of Alexander Rajbhandari and Lynn Duan.
(Updates with additional context, analyst comments begin in fourth paragraph.)
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