Stock Market: Warren Buffett sells 49% of his Apple shares! What is behind this move?

The recent decision by Warren Buffett to sell a significant portion of Apple shares held by Berkshire Hathaway has taken the financial community by surprise. By selling nearly half of his holdings in one of the world’s most valuable companies, the renowned investor is stepping away from his reputation as a steadfast supporter of quality businesses. This move, unusual for someone of his stature, raises questions about the motivations behind this action and the signals it sends about the current economic and technological outlook.

The massive sale of Apple shares by Berkshire Hathaway

Warren Buffett made a surprising decision by parting with nearly half of the Apple shares held by Berkshire Hathaway. The sale, carried out during the second quarter of 2024, reduced the holding company’s stake in the firm to an estimated value of $84.2 billion. This transaction comes after a notable 23% increase in Apple’s stock price, which reached an all-time high.

This operation marks a significant change in Buffett’s strategy, who previously reduced Berkshire Hathaway’s stake in Apple by 13% in the first quarter of the year. Historically, Apple’s position was so important in Berkshire’s portfolio that it made up almost half of it. This divestment is part of a broader trend of reducing the company’s exposure to stocks, as Berkshire Hathaway has accumulated cash at an unprecedented level.

A liquidity strategy and economic anticipations

The massive sale of Apple shares by Berkshire Hathaway is part of a broader strategy of cash management and portfolio repositioning. Warren Buffett, often seen as a savvy investor, seems to have anticipated an increased need for financial flexibility. Indeed, the holding company’s cash reserves reached a record amount of $277 billion, up from $189 billion three months earlier, a sign of unusual caution.

At the last annual general meeting of Berkshire Hathaway, Buffett had mentioned the possibility of a future increase in capital gains taxes, which might have motivated this reduction of the stake in Apple. This fiscal perspective could have been a determining factor in his decision to monetize some of the recent rise in the stock’s price. Yet, the investment in Apple remains a cornerstone of the holding company’s portfolio, despite the significant reduction in its size.

This strategic move could also reflect a broader assessment of the US economy. Berkshire Hathaway’s disengagement from other large positions, such as Bank of America, suggests a certain wariness towards current valuations and a possible anticipation of economic turbulence.