Stock god Buffett is rapidly reducing his holdings to cash out!
On the evening of August 3rd Beijing time, Berkshire Hathaway, owned by Warren Buffett, disclosed its financial report showing that the company sold 49.4% of its stake in Apple Inc. in the second quarter, with its holdings dropping from 789 million shares at the end of the first quarter to approximately 400 million shares at the end of the second quarter.
Previously, Buffett reduced his stake in Apple by 13% in the first quarter and hinted at the Berkshire Hathaway annual meeting in May that this was due to tax reasons. But the massive sell-off in the second quarter suggests that this may not just be a tax saving measure. Since mid July, Buffett has also started to reduce his second largest holdings - Bank of America. Berkshire Hathaway has reduced its holdings of Bank of America for 12 consecutive trading days, reducing its holdings by a total of 90 million shares and cashing out approximately $3.8 billion.
In addition, according to the financial report disclosed on the evening of August 3, Berkshire Hathaway's second quarter revenue was $93.653 billion, with a market expectation of $91.09 billion; The net profit was 30.348 billion US dollars, exceeding expectations, compared to the previous market estimate of 17.786 billion US dollars.
At the end of the second quarter, Berkshire Hathaway's cash reserves reached a new high of $276.9 billion, compared to $189 billion at the end of the first quarter. Analysis suggests that Berkshire Hathaway's large cash holdings may indicate Buffett's concerns about the overall US economy.
Crazy reduction of Apple holdings
Stock guru Buffett is accelerating his pace of reducing holdings. According to the financial report disclosed on the evening of August 3, Buffett's Berkshire Hathaway sold $75.5 billion worth of stocks in the second quarter.
According to the financial report, as of the end of the second quarter, Berkshire Hathaway held Apple shares worth $84.2 billion, with approximately 400 million shares held. At the end of the first quarter, Berkshire Hathaway held 789 million shares of Apple Inc. That is to say, Berkshire Hathaway sold 389 million shares of Apple in the second quarter. Currently, Berkshire Hathaway holds approximately 2.6% of Apple's shares, valued at approximately $88 billion based on last Friday's closing price of $219.86.
As of June 30th, 72% of Berkshire Hathaway's total fair value equity investments were concentrated in American Express, Apple Inc., Bank of America, Chevron, and Coca Cola, with market values of $35.1 billion, $84.2 billion, $41.1 billion, $18.6 billion, and $25.5 billion, respectively.
Previously, Berkshire Hathaway reduced its stake in Apple by 13% in the first quarter and hinted at its annual meeting in May that this was due to tax reasons. Buffett pointed out that if the US government wants to make up for the continuously rising fiscal deficit and increase capital gains tax, then this year's "small sale of apples" will benefit Berkshire Hathaway shareholders in the long run.
However, the significant sell-off of Apple in the second quarter indicates that this may not be just a tax saving measure. Berkshire Hathaway began purchasing Apple stocks in 2016 under the influence of Buffett's investment aides Ted Weschler and Todd Combs. Over the years, Buffett has become increasingly fond of Apple, significantly increasing his holdings, making it Berkshire Hathaway's largest holding company, and calling this tech giant the second largest business after his insurance company. After the sales in the past two quarters, Apple remains Berkshire Hathaway's largest holding.
Currently, a key question is whether Berkshire Hathaway will continue to reduce its holdings in Apple in the third quarter, and may even completely liquidate the company's stock.
On August 1st, Apple disclosed its financial report for the third quarter of the 2024 fiscal year (second quarter of the calendar year). Data shows that Apple achieved a revenue of $85.8 billion in the third quarter, a year-on-year increase of 5%, which is higher than analysts' expectations of $84.5 billion. However, Apple's performance in Greater China has disappointed the market, with revenue dropping 6.5% year-on-year to $14.7 billion, lower than market expectations of $15.3 billion. Apple attributed this decline mainly to the strengthening of the US dollar, but even after excluding the impact of exchange rates, the decline in its sales in the Chinese market exceeded analysts' expectations. The above data has once again raised concerns that Apple is losing ground in one of its most important overseas markets.
It is worth noting that besides Apple, Berkshire Hathaway is also "liquidating" its second largest holding, Bank of America. On Thursday, Berkshire Hathaway released its latest documents showing that the company has sold off Bank of America stocks for the 12th consecutive trading day.
Specifically, between July 30th and August 1st, Berkshire sold 19.22 million shares of Bank of America stock; Between July 25th and 29th, Berkshire Hathaway reduced its holdings by approximately 18.41 million shares; Between July 22nd and July 24th, Berkshire Hathaway reduced its holdings by nearly 19 million shares; Between July 17th and July 19th, Berkshire Hathaway reduced its holdings by 33.89 million shares. That is to say, over the course of 12 trading days, Berkshire Hathaway reduced its holdings of 90 million shares of Bank of America stock and cashed out approximately $3.8 billion. Currently, Berkshire Hathaway still holds 942 million shares of Bank of America, making it the largest shareholder of Bank of America.
Cash reserves set a new record
According to the financial report disclosed on the evening of August 3, Berkshire Hathaway's second quarter revenue was $93.653 billion, compared to $92.503 billion in the same period last year, and the market expectation was $91.09 billion; The net profit for the second quarter was 30.348 billion US dollars, exceeding expectations. The market had previously estimated it to be 17.786 billion US dollars, compared to 35.912 billion US dollars in the same period last year.
At the end of the second quarter, Berkshire Hathaway's cash reserves reached a new high of $276.9 billion, compared to $189 billion at the end of the first quarter. The significant increase in cash reserves in the second quarter was mainly due to Berkshire's net sale of $75.5 billion in stocks, marking the seventh consecutive quarter in which Berkshire sold more stocks than bought.
In the second quarter, profits of dozens of Berkshire Hathaway subsidiaries increased by 15% year-on-year, reaching $11.6 billion, or approximately $8073 per Class A share, compared to $10.04 billion in the same period last year. Nearly half of the profits come from underwriting and investing in Berkshire Hathaway's insurance business.
Analysis suggests that Berkshire Hathaway's massive cash holdings may also indicate Buffett's concerns about the overall US economy - many investors see Berkshire as a barometer. Government data released on Friday showed that US job growth has slowed and the unemployment rate has reached its highest level since October 2021, prompting some analysts to predict that the Federal Reserve will cut interest rates multiple times starting in September. Once the interest rate cut begins, Berkshire's return on short-term treasury bond bonds should decline.
Berkshire Hathaway is also reducing cash buybacks of its own stocks, with only $345 million repurchased in the second quarter and no repurchases in the first three weeks of July.
Buffett once said at Berkshire Hathaway's annual meeting on May 4th, "We really want to spend this money, but we won't spend it unless we believe that what we're doing is low-risk and can make a lot of money." He was referring to Berkshire's cash.
Buffett, who is 93 years old, has been leading Berkshire Hathaway since 1965, building it into a conglomerate with dozens of businesses including Geico Auto Insurance, BNSF Railroad, Berkshire Hathaway Energy, and more. Greg Abel, the 62 year old vice chairman, is expected to eventually succeed Buffett as the CEO of Berkshire Hathaway.