Buffett's Bold Apple Sell-Off: A $230 Billion Gamble on Liquidity

In the first half of this year, Warren Buffett made headlines with his significant reduction of Apple stock. The Oracle of Omaha executed the largest stock sell-off in his history, shedding approximately 55% of his Apple holdings. This move surprised many, considering Apple's share price has since appreciated by around 10%.

Calculations reveal that Buffett's Berkshire Hathaway incurred an approximate $230 billion loss following this substantial sell-off. Initially, as of early 2024, Berkshire held 905.6 million Apple shares valued at approximately $174 billion. However, by the end of the second quarter, Berkshire's Apple holdings had dwindled to $84 billion.

Initially, in the first quarter, Berkshire reduced its Apple shares by 13%, selling approximately 116.2 million shares. This was followed by the sale of an additional 389.7 million shares in the second quarter. Despite these sales, Apple's stock has risen about 10% in the third quarter, driven by investor excitement over its "Apple Intelligence" technology, which has boosted hardware sales.

The exact price at which Buffett sold Apple shares remains undisclosed, leading some to estimate using the average stock prices from the first and second quarters. It is believed that Berkshire sold around 505.9 million shares at an average weighted price of $186.15, resulting in a loss of approximately $232 billion.

Berkshire's reasons for the sale remain unspecified by Buffett, but he has previously mentioned the potential rise in corporate tax rates if existing laws expire as a factor. During Berkshire’s annual meeting in May, Buffett commented that tax considerations influenced the decision to sell some Apple shares.

Some investors speculate that the sell-off was due to Apple's stock constituting more than 40% of Berkshire’s equity investment portfolio, reflecting an oversized position. Additionally, Buffett has been reducing stock positions in general, opting to hold cash instead. As of mid-August, Buffett’s cash reserves hit a record high of $189 billion, indicating a strategic shift towards liquidity.