Berkshire cuts Apple investment by about 13%, Buffett hints that it's for tax reasons

OMAHA, Nebraska — Warren Buffett’s Berkshire Hathaway cut its gigantic Apple stake in the first quarter as the “Oracle of Omaha” continued to downsize his one-time favorite bet.

In its first-quarter earnings report released Saturday, Berkshire Hathaway reported that its Apple bet was worth $135.4 billion, implying around 790 million shares. That would mark a decline of around 13% in the stake. Apple was still Berkshire’s biggest holding by far at the end of the quarter.

This is the second quarter in a row that the Omaha-based conglomerate has trimmed the stake in the iPhone maker. It sold about 10 million Apple shares (just 1% of its massive stake) in the fourth quarter. This filing, when accounting for the change in Apple’s stock price, would imply Berkshire sold about 116 million shares.

Buffett, while answering shareholder questions at Berkshire’s annual meeting in Omaha, suggested that the sale was for tax reasons following sizable gains. He also implied the sale could be tied to him wanting to avoid a higher tax bill down the road if rates go higher to fund a ballooning U.S. fiscal deficit.

“It doesn’t bother me in the least to write that check and I would really hope with all that America’s done for all of you, it shouldn’t bother you that we do it and if I’m doing it at 21% this year and we’re doing it a little higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year,” Buffett said at the meeting.

Buffett became a big fan of Apple after one of his investing managers Ted Weschler or Todd Combs convinced him to buy the stock years ago. Buffett even called the tech giant his second-most important business after Berkshire’s cluster of insurers.

Many had speculated that the 93-year-old investing icon reduced his favorite stake due to valuation concerns. Apple’s stock gained a whopping 48% in 2023 as megacap tech shares led the market rally. At its peak, Apple ballooned in Berkshire’s equity portfolio, taking up 50% of it. The shares are trading at more than 27 times forward earnings.

But Buffett at the meeting continued to praise Apple, saying it was “extremely likely” that Apple will remain Berkshire’s largest holding at the end of 2024.

Shares of the iPhone maker got a big boost in the past week after the firm announced that its board had authorized $110 billion in share repurchases, the largest in company history. However, Apple posted a decline in overall sales and in iPhone sales. The shares are down more than 4% so far this year amid concerns about how it will revive growth.

Even with the sale, Berkshire is still Apple’s largest shareholder outside of exchange-traded fund providers.