Berkshire’s Big Move: Buffett’s Apple Sell-Off and Record Cash Pile Signals Tax Strategy
In a significant shift that has caught Wall Street’s attention, Warren Buffett’s Berkshire Hathaway has dramatically reduced its stake in Apple while building up a record-breaking cash reserve of $325.2 billion. Buffett’s prediction of upcoming changes in capital gains tax rates appears to drive this strategic move.
The Oracle of Omaha has been systematically scaling back what was once one of his most profitable investments. Over just one year, Berkshire has sold more than two-thirds of its Apple holdings.
In the third quarter alone, the company offloaded 100 million shares, bringing its total Apple stake down to 300 million shares. While Apple remains Berkshire’s largest holding at $69.9 billion, this is a sharp decline from its peak value of $178 billion.
Apple is not the only company on the selling spree. Berkshire has been a net seller of stocks for eight straight quarters, purchasing just $1.5 billion in stocks during Q3 2024. The company also reduced its position in Bank of America, contributing to its massive cash stockpile.
Behind the Strategy
What’s driving these moves? Buffett has been clear about his concerns regarding future tax policies. During Berkshire’s annual shareholder meeting in May, he stated, “I think that higher taxes are quite likely.” The current political landscape seems to have an impact on this perspective.
- Vice President Harris has proposed raising corporate tax rates to 28%.
- The federal deficit stands at roughly 122% of GDP.
- Tax policy remains a key election issue.
Impact on Performance
Despite the conservative approach, Berkshire’s performance remains strong:
- The share price has increased by 52% over the past three years.
- Outperforming S&P 500’s 22% gain
- The operating profit reached $10.09 billion in the third quarter.
Insurance Challenges
The company encountered several challenges in the third quarter of 2024.
- Hurricane Helene caused $565 million in losses.
- Insurance underwriting profit dropped 69%.
- Hurricane Milton is expected to cause losses of $1.3-1.5 billion in Q4.
Looking Forward
While maintaining Apple as its largest investment, Berkshire’s strategy reflects Buffett’s characteristic long-term thinking. “I don’t mind at all, under current conditions, building the cash position,” Buffett explained, suggesting he’s positioning Berkshire for future opportunities while protecting against potential tax changes.
The moves also highlight an important transition period for Berkshire, as Greg Abel, age 62, stands ready to eventually take over leadership from the 94-year-old Buffett. The company continues to maintain its diverse portfolio, from BNSF Railroad to Dairy Queen and See’s Candies, while adapting to changing market conditions.
Despite the massive sell-off, Buffett maintains his characteristic optimism about paying taxes: “We always hope at Berkshire to pay substantial federal income taxes; we think it’s appropriate.” This balance of strategic planning and civic responsibility continues to define Berkshire’s approach under Buffett’s leadership.
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