CA - Berkshire Hathaway's Apple Stake Reduction: Likely A Macro Decision
2024-05-09 07:40:58 ET
Summary
- Berkshire Hathaway's decision to reduce its stake in Apple, while seemingly being painted as a tax-driven decision, might have hidden nuances.
- Macroeconomic data from the Federal Reserve indicate rising financial stress on ordinary Americans, while perceptions shift around the likelihood of a hard landing.
- If a recession is imminent, Berkshire Hathaway's massive cash position enables it to shift focus onto recession favorites such as financials and energy - sectors it's already strong in.
On the 4th of May, asset management firm Berkshire Hathaway Inc ( BRK.A and BRK.B ) announced in the course of its first quarter earnings release that its biggest bet - Apple Inc. ( AAPL ) - was worth $135.4 billion, implying that the former held around 790 million shares of the latter. This meant that the "Oracle of Omaha" (as Berkshire Hathaway principal Warren Buffett is often referred to as) has authorized the disposal of around 116 million shares, or 13% of its total stake in Apple.
Most "Buffettologists" would recognize that Berkshire Hathaway's investment style isn't known to be tactical; holding "strong for long" is the underlying message of their methodology. Apple is certainly one such example and for good reason: unlike fellow "Magnificent Seven" constituent Tesla ( TSLA ), Apple has only declined a little under 2% in the Year Till Date (YTD) despite signs of sales slowdown in major market China and signs of stagnation elsewhere. Furthermore, this is the second consecutive quarter wherein the company's Apple bet was cut: in the last quarter, around 1% of its held stake was disposed of....
Berkshire Hathaway's Apple Stake Reduction: Likely A Macro Decision