In a surprising turn of events, Warren Buffett’s Berkshire Hathaway significantly reduced its stake in Apple, selling about 115 million shares despite being bullish about the tech giant’s future. As of the end of last year, Berkshire held Apple stock valued at $174.3 billion, which dropped to $135.4 billion by March 31. This sale, the second consecutive quarterly reduction, was confirmed at the Berkshire Hathaway annual shareholder meeting, where Buffett, alongside Apple CEO Tim Cook, highlighted his ongoing confidence in Apple.
Despite his optimism, Buffett’s strategic sell-off appears influenced by his anticipation of changes in U.S. tax policies. Currently enjoying a 21-percent federal tax rate on gains, significantly lower than historical highs, Buffett expressed expectations of rising taxes given current fiscal policies. He reasoned that preemptive actions, such as reducing holdings in high-value assets like Apple, could mitigate future financial impacts due to potential tax increases.
Simultaneously, Apple reported its most significant drop in iPhone sales since the early pandemic months, with a 10% decrease in sales from January to March compared to last year. Despite this slump, Apple’s share price rose nearly 7% after the earnings announcement, hinting at investor confidence in its long-term prospects, especially with its aggressive push into generative AI.
Meanwhile, Berkshire Hathaway itself has seen substantial financial growth. The conglomerate reported a 39% increase in operating profits after taxes, reaching a record $11.2 billion, bolstered by its insurance business and higher investment income. This financial uptick comes as Berkshire’s cash reserves swelled to a record $189 billion, partly due to its reduced Apple stake.
Warren Buffett’s decision to sell Apple stock, despite his optimistic view of the company, underscores a strategic approach to managing investments in anticipation of external economic changes, particularly potential tax reforms. This move highlights the complexities of investment strategies in response to evolving fiscal environments.