Berkshire Hathaway reduced its stake in Apple in the first quarter, and Warren Buffett’s conglomerate allowed its cash reserves to grow to a record $189 billion, Reuters reports, News.ro reports.
Buffett’s company also posted a record operating profit of $11 billion as its insurance operations benefited from improved underwriting and higher investment income as interest rates rose.
The value of Berkshire’s stake in Apple fell 22% to $135.4 billion on March 31 from $174.3 billion at the end of 2023, even as the iPhone maker’s share price fell just 11% in the fourth quarter.
Based on changes in Apple’s share price, Berkshire appears to have sold about 115 million shares, or 13% of its holdings, in the quarter that ended with about 790 million.
The boom is a change for Buffett, who usually oversees the technology sector but has come to see Apple as a consumer goods company with significant pricing power and loyal customers.
But some investors have expressed concern that Apple has eaten up too much of Berkshire’s investment portfolio. But the sales leave Buffett with more than six times the $30 billion minimum he promised to keep.
At Berkshire’s annual shareholder meeting on Saturday, Buffett assured shareholders that “unless something extraordinary happens that dramatically changes our capital allocation, we will have Apple as our largest investment.”
He also said “it is not a big deal” to expand the money account due to stock market volatility and conflicts around the world, and said money could exceed $200 billion by the end of June.
The sale of Apple gave Berkshire an after-tax gain of $11.2 billion in the first quarter from the sale of investments.
Buffett said he doesn’t mind paying taxes.
Berkshire’s first-quarter operating profit rose 39 percent to $11.22 billion, or about $7,807 per Class A share, from $8.07 billion a year earlier.
“Berkshire continues to benefit from attractive short-term investment returns and a strong cash balance,” Edward Jones analyst James Shanahan said in a research note.
Net profit fell 64 percent to $12.7 billion, or $8,838 a share, from $35.5 billion a year earlier, when Berkshire had large unrealized gains on its stock.
An accounting rule requires Berkshire to report these earnings along with its financial results. Buffett urges investors to ignore the resulting volatility.
Berkshire also bought $2.6 billion of its own stock in the first quarter and a small amount in the first three weeks of April.
2024-05-05 04:26:42
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