Even Warren Buffett seems to have trouble timing the S&P 500. His surprise sale of about half of his Apple shares has cost him a pretty penny in a short time.
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Shares of Apple (AAPL) rose 7.5% from June 30, the end of Berkshire Hathaway‘s (BRKB) most recent trading disclosure window. That means you’re missing out on a staggering $6.2 billion in gains since then, according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. And that doesn’t include the capital gains tax bill that likely triggered the sale.
Buffett’s sale of 389.4 million shares of Apple stock in the second quarter initially spooked investors. After all, many big tech stocks had peaked in mid-July and were already selling off. Did Buffett know something the rest of us didn’t? But since then, Apple and other tech stocks have quickly rebounded.
“Despite all the macro noise, the growth scare last week, the Fed’s ‘too late’ camp, Buffett cutting Apple stake by 50%, the unwinding of the Yen currency trade, the market volatility and the bear chatter of the past few weeks, the overall tech earnings season has been robust,” said Dan Ives of Wedbush Securities. “And we believe (the tech earnings season) further amplifies the AI tidal wave of spending coming to the shores of the rest of the tech world,” Ives said.
Buffett is a bit more relaxed about Apple
The timing and ferocity with which Berkshire Hathaway sold its Apple shares surprised many investors.
Buffett’s Berkshire Hathaway began accumulating Apple shares in the first quarter of 2016, with 39.2 million shares. And since then, the famed investor’s holding company has been aggressively adding to its position. As of the third quarter of 2018, Berkshire Hathaway owned more than 1 billion shares of Apple stock.
But there has been some trimming since then. Berkshire Hathaway now owns 400 million shares of Apple stock, worth about $88.7 billion. And despite selling about half of its shares in the second quarter of this year, Apple remains Berkshire Hathaway’s largest publicly traded position. American Express (AXP) comes in a distant second, valued at around $37 billion.
But Berkshire Hathaway’s role as an Apple investor is diminishing. Berkshire Hathaway still owns 2.6% of Apple. However, that makes it only the fourth-largest owner of the stock. The largest owner is index fund giant Vanguard Group.
Adding Pain to Apple Sales
Selling half of Apple was clearly the most expensive move Berkshire Hathaway made in the second quarter. But it’s not the only one.
Berkshire Hathaway also sold shares of T-Mobile US (TMUS), Louisiana Pacific (LPX) and Floor & Decor (FND). All of those stocks have also risen since late June. The value of all those shares sold cost Berkshire Hathaway another $23 million in lost profits — not much for a portfolio of Buffett’s size — but still a quick loss.
Additionally, Buffett added shares to the S&P 500 during the quarter by selling Apple, Occidental Petroleum (OXY), has taken a turn for the worse. Buffett’s additional 7.3 million shares of the energy company fell 8.3% from the end of the June reporting period. That’s a quick paper loss of $38.2 million.
Again, it’s not the end of the world. But a bigger profit would have made the loss on Apple more palatable.
Buffett’s Troubled Times
Missed losses on sold positions and paper losses on added positions
Company | Symbol | % ch. From June 30 | Loss from transaction |
---|---|---|---|
Apple (sold 49%) | AAPL | 7.5% | -$6,178,615,375.14 |
Occidental Petroleum (bought 3%) | Oxy-oxygen | -8.3% | -$38,169,145.98 |
T-Mobile US (sold 11%) | TMUS | 11.2% | -$11,234,700.00 |
Louisiana-Pacific (sold 10%) | LPX | 15.3% | -$7,990,403.48 |
Floor & Decor Holdings (sold 17%) | FND | 5.8% | -$4,652,354.00 |