(Bloomberg) — Continued selling of Apple Inc. shares by Berkshire Hathaway Inc. in the third quarter, the conglomerate’s stake remained a fraction of its size at the beginning of the year.
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Berkshire cut its stake in the iPhone maker by about 25% in the period, after cutting it by nearly half in the second quarter. Apple shares rose 10.6% in the period ending September 30.
Warren Buffett hinted at Berkshire’s annual meeting in May that Apple’s first-quarter sales were partly driven by tax implications, and that the tech giant would remain the biggest investment for the Omaha, Nebraska-based conglomerate.
That’s still true, even though Berkshire’s stock is now valued at $69.9 billion, down from $174.3 billion at the end of last year, a drop of almost 60%. Buffett has not revealed his views on Apple since the annual meeting.
Apple is facing a series of challenges, including a lack of meaningful growth for its signature iPhone. Last week, Apple told investors it expects sales growth in the low to mid-single digits for the December period, lagging expectations 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 tightening scrutiny of antitrust and competition concerns. And Apple has lagged behind its rivals in artificial intelligence. Last week, Apple introduced AI upgrades to its iPhone, iPad and Mac computers, but told customers that the most anticipated features won’t be available until December.
“I don’t think Warren Buffett has ever really been comfortable with technology,” says Jim Shanahan, an analyst at Edward Jones.
“The stock selling certainly started after Charlie Munger’s death,” Shanahan said, referring to Buffett’s longtime business partner, who died in 2023. “It could be that Munger always felt much more comfortable with Apple than Warren Buffett. ”
Another analyst suggested that Buffett’s Apple sales could be due to a simple portfolio rebalancing.
Cathy Seifert, a research analyst at CFRA, said Berkshire’s stake in Apple was becoming “an inordinately large percentage” of the overall portfolio. “I think it made sense to lighten that exposure a little bit.”
Here are some other key takeaways from Berkshire’s third-quarter results:
Money pile
Berkshire’s cash pile has reached record highs, while the world’s most famous investor is still struggling to find ways to spend it. The company had $325.2 billion in cash on hand at the end of the third quarter.
Buffett said at the annual meeting that the company is in no rush to deploy its treasure “unless we think we’re doing something that has very little risk and can make us a lot of money.”
Net seller
Berkshire sold a net $34.6 billion in shares during the quarter, and $127.4 billion since the beginning of the year. That’s a much faster pace of divestitures than last year, when twelve-month net sales were just $24.2 billion.
No buybacks
Buffett even refused to buy back Berkshire shares for the first time since the company changed its policy in 2018. It bought back $345 million of its own shares in the previous period, and $1.1 billion a year ago.
Since then, shares have become more expensive. Berkshire shares are up about 25% this year, pushing its market value to $974.3 billion.
Hurricane losses
Hurricane Helene’s impact on Berkshire’s earnings this quarter was $565 million.
It said Hurricane Milton is expected to result in a pre-tax hit of $1.3 billion to $1.5 billion in the fourth quarter.
Business profit
Berkshire Hathaway’s operating profit fell 6% from a year earlier to $10.1 billion, although a currency loss of about $1.1 billion in the period played a role.
Underwriting revenue at the company’s insurance operations fell 69% to $750 million, partly due to losses at its primary insurance unit.
–With help from Mark Gurman.
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