Berkshire Hathaway sold over $800M in Apple shares in Q1 2020

AppleInsider

Berkshire Hathaway, Warren Buffett's investment fund, has reduced its holdings in Apple over the last quarter, offloading in excess of $800 million worth of Apple stock over a three-month period, but it still maintains its position as the iPhone maker's biggest shareholder.

Berkshire Hathaway's Warren Buffett

As a company that has hit the trillion-dollar milestone multiple times, Apple's shares have become extremely valuable to existing investors and potential owners. As such, the decision for major investors to buy more stock or sell off their holdings in the company can generate considerable interest from onlookers, with Berkshire Hathaway's movements being some of the most important.

Uncovered in SEC filings published on Friday and seen by Business Insider, Berkshire Hathaway sold 3.7 million Apple shares in the last quarter. As the filing is a total for the quarter as a whole, the shares could have been sold for between $219 and $294 apiece, putting the total value sold at between $806 million and almost $1.1 billion.

Despite the sizable sale in terms of value, it is a relatively small amount of Berkshire Hathaway's total holdings in the company. After the sale, the firm is still Apple's largest shareholder, with a stake of 5.4% worth approximately $72 billion.

It is unknown exactly why Berkshire Hathaway sold the shares, but the small size compared to its entire ownership may have been to help generate funding to make other investments. Purchases in Kroger and Biogen were made by the firm in the same quarter.

Regardless, Apple continues to make up a considerable proportion of Berkshire Hathaway's assets, making up close to 30% of the holding company's share portfolio. As Berkshire Hathaway tends to invest for long periods of time, it is probable that Apple will be significant to its portfolio for quite a while longer.

In May 2019, Warren Buffett pointed to Apple's continued earnings as a reason for the continued investment in the company, though the number of shares held is unlikely to go up anytime soon. Earlier in February 2019, the "Sage of Omaha" claimed "If it were cheaper, we'd be buying it," a time when Apple's shares were valued at $174.

carnegie

Berkshire Hathaway now reports dispositive power over 250.9 million shares of AAPL. Most of those are reported on Berkshire's 13Fs; about 5.7 million are reported on New England Asset Management's 13Fs.


EDIT: To add, Berkshire's self-reported stake in Apple was, as of the end of last year, 5.6%.

EDIT 2: I checked my math, and 3.7 million shares is right. I previously posted that it was 4.4 million.

lkrupp

carnegie said:

According to Berkshire Hathaway's 13Fs, it sold 4.4 million (4,433,763) shares of AAPL last quarter - not 3.7 million shares. I saw that Business Insider report, but I think their math is wrong.

Berkshire Hathaway now reports dispositive power over 250.9 million shares of AAPL. Most of those are reported on Berkshire's 13Fs; about 5.7 million are reported on New England Asset Management's 13Fs.


EDIT: To add, Berkshire's self-reported stake in Apple was, as of the end of last year, 5.6%.

Locking in profit is no sin.

gareth2210

And despite this large sale Apple shares rose from 264 USD in Dec to 324 USD in mid-Feb! I think I'll hold on to my (considerably more modest!) holding. In fact, I'm rather disappointed that the shares haven't dipped further with Trump's trade war and the CoVid 19 scare as I have some cash I want to invest. : )

MacPro

lkrupp said:

carnegie said:

According to Berkshire Hathaway's 13Fs, it sold 4.4 million (4,433,763) shares of AAPL last quarter - not 3.7 million shares. I saw that Business Insider report, but I think their math is wrong.

Berkshire Hathaway now reports dispositive power over 250.9 million shares of AAPL. Most of those are reported on Berkshire's 13Fs; about 5.7 million are reported on New England Asset Management's 13Fs.


EDIT: To add, Berkshire's self-reported stake in Apple was, as of the end of last year, 5.6%.

Locking in profit is no sin.

We sold a small chunk at 310 to buy a vacation home in Maine and it's all good but it still feels annoying watching it go up to 324 and wishing you'd waited a few more weeks lol.  I know, I know better than it going down!

carnegie

gareth2210 said:

And despite this large sale Apple shares rose from 264 USD in Dec to 324 USD in mid-Feb! I think I'll hold on to my (considerably more modest!) holding. In fact, I'm rather disappointed that the shares haven't dipped further with Trump's trade war and the CoVid 19 scare as I have some cash I want to invest. : )

Looks like you might get your chance.

muthuk_vanalingam

lkrupp said:

carnegie said:

According to Berkshire Hathaway's 13Fs, it sold 4.4 million (4,433,763) shares of AAPL last quarter - not 3.7 million shares. I saw that Business Insider report, but I think their math is wrong.

Berkshire Hathaway now reports dispositive power over 250.9 million shares of AAPL. Most of those are reported on Berkshire's 13Fs; about 5.7 million are reported on New England Asset Management's 13Fs.


EDIT: To add, Berkshire's self-reported stake in Apple was, as of the end of last year, 5.6%.

Locking in profit is no sin.

He didn't say it either, so not sure why you made that comment. 

GeorgeBMac

gareth2210 said:

And despite this large sale Apple shares rose from 264 USD in Dec to 324 USD in mid-Feb! I think I'll hold on to my (considerably more modest!) holding. In fact, I'm rather disappointed that the shares haven't dipped further with Trump's trade war and the CoVid 19 scare as I have some cash I want to invest. : )

... and that increase was based on what exactly?

Could it be that the U.S.  S&P is trading at nearly 2/3's above it's average PE -- largely because with renewed financial repression from the Fed and fears of a coming global downturn driving interest rates down even further -- people have no where else to put their money?

bobajoul2

This is standard portfolio balancing action, the stock is too big a portion of the portfolio economically, so they need to balance it.  This is a curious Wall Street logic, as they are selling a stock because they are making too much money!  I have had my managers call me to lighten up on Apple because it is becoming too large a percentage of my retirement, and the last time they tried this they sold half my holdings the first time, pre split, that it hit 100.  That move cost me lots.  Good policy if you are playing with other peoples money but not so great with mine!  My adjusted basis for Apple is below $1, so I hold. 

SpamSandwich

bobajoul2 said:

This is standard portfolio balancing action, the stock is too big a portion of the portfolio economically, so they need to balance it.  This is a curious Wall Street logic, as they are selling a stock because they are making too much money!  I have had my managers call me to lighten up on Apple because it is becoming too large a percentage of my retirement, and the last time they tried this they sold half my holdings the first time, pre split, that it hit 100.  That move cost me lots.  Good policy if you are playing with other peoples money but not so great with mine!  My adjusted basis for Apple is below $1, so I hold. 

You should fire your advisors. Owning AAPL that early should enable you to hire better people. My stock advisor occasionally attempts to contact me after I explicitly told my brokerage I wanted no advisors to ever contact me. I never return any of their calls.

GeorgeBMac

bobajoul2 said:

This is standard portfolio balancing action, the stock is too big a portion of the portfolio economically, so they need to balance it.  This is a curious Wall Street logic, as they are selling a stock because they are making too much money!  I have had my managers call me to lighten up on Apple because it is becoming too large a percentage of my retirement, and the last time they tried this they sold half my holdings the first time, pre split, that it hit 100.  That move cost me lots.  Good policy if you are playing with other peoples money but not so great with mine!  My adjusted basis for Apple is below $1, so I hold. 

I prefer the  "Buy Low / Sell High" philosophy.

SpamSandwich

GeorgeBMac said:

bobajoul2 said:

This is standard portfolio balancing action, the stock is too big a portion of the portfolio economically, so they need to balance it.  This is a curious Wall Street logic, as they are selling a stock because they are making too much money!  I have had my managers call me to lighten up on Apple because it is becoming too large a percentage of my retirement, and the last time they tried this they sold half my holdings the first time, pre split, that it hit 100.  That move cost me lots.  Good policy if you are playing with other peoples money but not so great with mine!  My adjusted basis for Apple is below $1, so I hold. 

I prefer the  "Buy Low / Sell High" philosophy.

They bought AAPL at $1 (presumably back in the 80s or 90s). That is very, very low and their return on investment would be very, very high.

carnegie

Berkshire's Apple position is now, if Berkshire hasn't net sold any Apple shares since the end of the year, worth about $81 billion. That represents nearly 32% of Berkshire's portfolio, and the position is larger than Berkshire's next 3 largest positions combined. With a cost basis of about $35 billion, Berkshire's gain on its current Apple position (not accounting for dividends) is about $46 billion.

Because of recent changes to accounting rules Berkshire has to report, as part of its net income, its after-tax unrealized gains from its equity holdings. So for the past quarter it will be reporting a very high net income which includes about $15 billion of income from the change in the value of its Apple position.

carnegie

Berkshire's annual report is now out.  It reports GAAP earnings of $81.4 billion in 2019, but most of that is from unrealized capital gains.

Berkshire saw an increase in unrealized capital gains of nearly $70 billion in 2019 with about half of that coming from its Apple position. For GAAP earnings purposes Berkshire has to account for the tax liability it would owe on those gains. But even doing that Berkshire made more money (based on GAAP accounting) from its Apple position than it did from operations. It reported operating earnings of $24 billion. Accounting for dividends, realized gains, and unrealized gains, Berkshire made nearly $30 billion from its Apple position in 2019.


EDIT: For the record, I'm not a fan of the new GAAP rules which require Berkshire, and others, to report those unrealized capital gains as net income.

SpamSandwich

carnegie said:

Berkshire's annual report is now out.  It reports GAAP earnings of $81.4 billion in 2019, but most of that is from unrealized capital gains.

Berkshire saw an increase in unrealized capital gains of nearly $70 billion in 2019 with about half of that coming from its Apple position. For GAAP earnings purposes Berkshire has to account for the tax liability it would owe on those gains. But even doing that Berkshire made more money (based on GAAP accounting) from its Apple position than it did from operations. It reported operating earnings of $24 billion. Accounting for dividends, realized gains, and unrealized gains, Berkshire made nearly $30 billion from its Apple position in 2019.


EDIT: For the record, I'm not a fan of the new GAAP rules which require Berkshire, and others, to report those unrealized capital gains as net income.

GAAP is an acronym for Generally Accepted Accounting Principles.*

For more information:
https://www.investopedia.com/terms/g/gaap.asp

carnegie

So... Berkshire’s stake in Apple (if it hasn’t sold a significant amount since the end of last year) is worth about $10 billion less than it was a week ago.