FINANCE
Why did Warren Buffett sell half of his Apple stock?
Billionaire investor Warren Buffet’s Berkshire Hathaway has sold half its Apple holdings. What caused the sell-off?
For those holding stock in Apple, the news that Berkshire Hathaway, the multinational conglomerate owned by billionaire Warren Buffet, sold half of his holdings in the technology company cannot sit well. However, before you panic and sell, consider what led Berkshire Hathaway to make that decision.
Apple’s stock price is at one of the highest levels it has ever been, which, if you follow the “buy low, sell high” rule in your trading, it may not seem like a bad time to trade in your stocks for some cash. Additionally, thanks to the herd mentality often seen by stockholders, when the selling begins, the price of a stock can fall, which could prompt others to sell before it hits its lowest point.
Berkshire Hathaway walks away from Apple
Peter Cohan, a senior contributor at Forbes and a financial markets expert, had trouble definitively saying why Berkshire would make such a dramatic move but mostly chalked it up to Apple’s slow growth prospects.
While Apple’s AI offerings could give consumers a reason to upgrade, the iPhone maker’s declining revenues in China, its regulatory woes, and the absence of a compelling growth vector — particularly if Apple Intelligence does not prove to be a killer app — could mean Apple will be lucky to achieve low single digit revenue growth.
Before you sell, consider that though Berkshire Hathaway’s move on Apple forms part of a longer-term trend within the conglomerate market activity, which has been much more focused on selling than buying. In the first quarter of 2024, Berkshire spent $2.56 billion on stock buybacks to inflate the value of their own stock. By purchasing their own stock, they decrease the supply, and with a smaller supply, the price pushes up should demand remain constant.