Why Did Warren Buffett Sell Apple Shares?

In a federal filing Tuesday, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) reported that in the fourth quarter of 2020 the company sold 9.81 million shares of Apple Inc. (NASDAQ: AAPL) for nearly $11 billion.

Berkshire Hathaway first began acquiring Apple stock in 2016 with a purchase of 9.81 million shares, and those shares had doubled in value by September of last year. It’s probably not coincidental that the number of shares Buffett sold is equal to the number his company first purchased. Berkshire Hathaway also sold about $800 million in Apple stock in the fourth quarter of 2019.

As of September of last year, Berkshire Hathaway owned Apple stock valued at $111.7 billion, up from shares valued at $73.7 billion in September of 2019. Even after selling shares last quarter, Buffett’s investment in Apple is valued at around $120 billion, according to Bloomberg.

Buffett and Berkshire Hathaway certainly are not giving up on Apple. The company’s stock will continue to be Berkshire Hathaway’s biggest equity investment. Yet, the $1 billion in profits that Buffet and company took will help pay for new stakes Verizon, Marsh & McLennan and Chevron purchased confidentially in the third quarter of 2020 for around $8 billion.

Berkshire Hathaway may not want any longer to keep more than 40% of its equity holdings in Apple stock. And it’s not because Buffett and his top investment managers think the stock is going to sink.

Selling off small pieces of its stake in Apple gives Berkshire Hathaway funds to invest in other equities, although the firm still concentrates on investments in established, mostly non-high-tech firms. Buffett also has trimmed investments in some banks, including long-time favorite Wells Fargo, and beefed up investments in health care stocks like Bristol-Myers Squibb and Merck, while selling his remaining stake in Pfizer.

Buffett also sold off his stake in Barrick Gold and cut his exposure to General Motors. The third-quarter purchases increased Berkshire Hathaway’s position to around $4.1 billion in Chevron and $8.6 billion in Verizon.

Apple stock traded down about 1% in early trading Wednesday, at around $131.50, in a 52-week range of $53.15 to $145.09. The stock’s consensus 12-month price target is $151.75.

Berkshire Hathaway’s B shares traded at around $245.50, up less than 1%, in a 52-week range of $159.50 to $246.19, a new high set Wednesday morning. The consensus price target on the stock is $260.

Berkshire Hathaway’s A shares traded up about 0.25% to $370,267.78, after posting a new 52-week high of $370,530.00 earlier in the morning.

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