Warren Buffett, CEO of Berkshire Hathaway, is reassessing his investment strategy, prompting discussions among investors regarding his recent sales of Apple shares. Buffett's stake in Apple peaked at 5.9%, valued at nearly $178 billion, but he has continued to reduce this position.
As of November 2, Buffett disclosed that he further decreased his holdings in the iPhone manufacturer and other stocks during the third quarter, resulting in a $97 billion gain for Berkshire Hathaway. This move raised the company's cash reserves to unprecedented levels, totaling $325 billion, which represents 28% of Berkshire's total assets, the highest percentage since at least 1990.
This decision has sparked speculation among analysts. Some suggest Buffett remains committed to principles learned from the legendary investor Benjamin Graham, pointing to Apple's high price-to-earnings ratio compared to its growth potential. Recently, Apple warned investors that future products may not be as profitable as the iPhone as it invests in artificial intelligence to compete with rivals like Google.
Others propose that Buffett's actions may indicate a larger strategy, possibly preparing for succession or anticipating a market downturn, which would justify accumulating cash. Analyst Greggory Warren noted, 'It’s a strange phenomenon to observe and raises the question: why is so much cash being accumulated?'
Buffett's limited stock purchases this year, totaling only $5.8 billion by the end of September, sharply contrasts with $133.2 billion in sales. This strategy may aim to mitigate stock risk and ensure liquidity for future investments, a tactic previously employed during market stress.
Buffett's long-standing admiration for Apple and the scarcity of other investment opportunities may underpin his recent moves. Berkshire Hathaway's significant investment in Apple began in 2016 when it acquired approximately 10 million shares for $1.1 billion. Since then, the company has amassed a substantial position in Apple, which is now being reduced as Buffett adopts a cautious approach in what he perceives as an overvalued stock market.
Investors will have to wait until Buffett’s annual letter in February for further insights into his intentions. Meanwhile, market observers are closely monitoring the actions of the 'Oracle of Omaha' for indications of his vision for Berkshire's future.