Why is Berkshire Hathaway dumping AAPL?

But what’s really catching attention is where he’s shifting those funds. For savvy traders, understanding Buffett’s moves could be the key to capitalizing on the next big opportunity.

Warren Buffett, known for his calculated investment strategies, has led Berkshire Hathaway to consistently outperform the S&P 500. Since taking control in 1965, Buffett’s investment decisions have become a beacon for traders worldwide. His sizable stake in Apple (AAPL), acquired starting in 2016, has been one of the most talked-about positions in recent years. Buffett even referred to Apple as a "better business" compared to others in Berkshire’s portfolio. However, his latest actions suggest a shift in strategy that traders should take note of.

According to CNBC, Buffett's Berkshire Hathaway has slashed its Apple holdings by 55%, reducing its stake from 905 million shares in December 2023 to 400 million by June 2024. This surprising move comes despite Apple's strong performance, with June quarter revenues of $85.8 billion—4.8% higher than the same period last year. However, challenges in key markets like China, where sales dropped 6%, and a 10% decrease in operating income have possibly led Buffett to reconsider the stock's future potential.

While cutting back on Apple, Buffett is increasingly bullish on another asset: Berkshire Hathaway itself. Over the last three quarters, he’s repurchased $5 billion worth of Berkshire shares, signaling his confidence in the company’s outlook. In his latest shareholder letter, Buffett noted that Berkshire's mix of businesses positions it to perform better than the average American corporation.

Berkshire’s financial performance has been solid, with June revenues rising 1.2% to $93.7 billion and operating earnings up 16% to $11.6 billion. Particularly impressive was the insurance division, with underwriting and investment income surging by 56%. However, Berkshire’s GAAP net income saw a 16% decline to $30.3 billion, a figure Buffett downplayed due to the volatility of unrealized stock gains and losses.

Analysts project Berkshire's operating earnings to grow by 10% in 2024, though they expect a slight slowdown to 3% growth in 2025. Buffett’s ongoing buyback program suggests he sees significant value in Berkshire Hathaway, even as he scales back on other investments like Apple.

Conclusion

Berkshire Hathaway's decision to significantly reduce its stake in Apple (AAPL) appears to be driven by a combination of factors: concerns about Apple's future growth prospects, particularly in key markets like China, and the company's stretched valuation. By reallocating capital away from Apple, Warren Buffett is strategically positioning Berkshire Hathaway to capitalize on more stable and potentially undervalued investments, including a renewed focus on his own company. This move reflects Buffett’s cautious yet calculated approach to managing risk and ensuring long-term growth, signaling to traders that it might be time to reassess the potential of Apple and consider where their capital can be more effectively deployed.