Buffett announces summit: Berkshire quietly sells half of its Apple shares amid unprecedented selling frenzy

When we stated yesterday, in discussing Buffett’s ongoing liquidation of his stake in Bank of America, that “Berkshire’s increased cash reserves simply reflect the company’s inability to find deals in the current overvalued and weak economic environment.Little did we know how accurate that would be, because fast forward a day later and we discover that far from simply dumping Bank of America, the 93-year-old Omaha billionaire had been quietly busy dumping his most iconic stake in an unprecedented selling spree that sent Berkshire’s cash pile soaring by a record $88 billion to an all-time high of $277 billion at the end of the second quarter.

As the chart below shows, in the second quarter (which ended on June 30th, and thus only two weeks after Apple’s developer conference which took place on June 10th and which was – at least on the day itself – a total failure), Berkshire sold a net $75.5 billion worth of stock, most of which, as we now know, came from Buffett liquidating half of his Apple shares.

While no Form 13F has yet been filed to accompany Berkshire’s 10Q, the company did provide a snapshot of its top holdings, revealing that as of June 30, it held just $84.2 billion in Apple shares, down sharply from $135.4 billion on March 31 and $174.3 billion on December 31, 2023. That translates to just 400 million AAPL shares held as of June 30, down nearly 50% from 789.4 million as of March 31 and 905.6 million as of the end of 2023.

The rest of Berkshire’s top 5 holdings (Bank of America, American Express, Coca Cola and Chevron) were unaffected in the second quarter, meaning Buffett has clearly decided it’s time for Apple to go (We have since learned that after the end of the second quarter, Buffett also began dumping a large portion of his Bank of America stock, of which he is the largest shareholder.).

While Berkshire’s cash balance increased by a record $88 billion – with proceeds from the sale of Apple making up the bulk of the new cash – the company also generated substantial cash from its own operations, and in the second quarter, Berkshire reported operating income of $11.6 billion, up from $10 billion in the same period a year ago.

Berkshire has struggled for years to find ways to deploy its mountain of cash in a bleak deal environment, lamenting the lack of cheap opportunities. At the company’s annual shareholder meeting in May, Buffett said he was in no hurry to spend “unless we think we’re doing something that has very little risk and can make us a lot of money.” It now appears that not only was Buffett in no hurry to spend, but that in taking advantage of the AI ​​bubble, he aggressively liquidated his largest holding.

Perhaps most remarkable is When And how Buffett Dumped Half His Apple Holdings: Berkshire managed to dump a staggering $84 billion, or some 390 million shares, in AAPL at a time when the stock was rapidly appreciating, and especially after the debacle that followed the WWDC24 developer conference. In other words, savvy investors rushed to sell their shares at retail because, as we noted at the time, Hedge funds were certainly not buy technology right now, as we reported on July 1 in “Out of Dodge: Hedge Funds Are Selling and Shorting Stocks at Fastest Pace in Two Years,” almost as if they had noticed that Buffett was dumping…

One might also wonder if Buffett had something to do with Apple’s bizarre performance after WWDC24. As a reminder, the knee-jerk response to Tim Cook’s “earth-shattering” revelation of a Siri GPT cat was a huge failure, with the stock plummeting on the day of WWDC24.

*APPLE EXTENDS DECLINE DUE TO DEVELOPER CONFERENCE PRESENTATION

— zerohedge (@zerohedge) June 10, 2024

It wasn’t until the next day that, thanks to a relentless barrage of bullish sell reports and spurred by a furious buyback order from the company itself, the stock began to climb and take back the world’s most valuable spot from Microsoft. One almost wonders if Buffett didn’t call in some favors from his banking friends on this one…

Finally, it’s not just AAPL that Buffett considers overvalued and is selling its shares aggressively: the billionaire clearly thinks the entire market is very expensive, and Berkshire only repurchased $345 million of its own stock during the quarter, the lowest amount since the company changed its buyback policy in 2018. That’s hardly surprising: As we noted in “Berkshire’s Growing Cash Pile Has a Hidden Message About Stocks,” Buffett’s indicator has rarely signaled a more expensive market.

Bottom line: Unlike in October 2008, when Buffett made the clarion call to “buy American,” this time he is selling American products at a rate never seen before.

Are you?

One thing is for sure: Buffett is afraid.