- Warren Buffett's Berkshire Hathaway cut its shareholding in Apple, its largest stock investment, at the end of 2018, a bearish signal amid worries about the tech giant's slowing iPhone sales.
- The news sent Apple's shares about 0.5% lower in premarket New York trading on Friday. Shares in Oracle tumbled on the news that Buffett also cut his stake in that company.
- Investors follow what Berkshire buys and sells closely because of Buffett's successful track record, and news of his holdings often moves share prices.
- Buffett's firm increased investments in US banks including JPMorgan and Bank of America Merrill Lynch.
Warren Buffett's Berkshire Hathaway cut its shareholding in Apple, its largest stock investment, at the end of 2018, a bearish signal amid worries about the tech Goliath's slowing iPhone sales.
A regulatory filing late Thursday showed that Berkshire Hathaway's stake in the tech giant fell 1% to 249.6 million shares in the three months that ended December 31, down from 252.5 million in the previous three months.
The news sent Apple's shares about 0.5% lower in New York trading, before recovering to be little changed. The filing also revealed that Buffett dumped stock of Oracle, sending that stock tumbling 2.9% in premarket trading. That stock has since recovered as well.
Buffett's assistant Debbie Bosanek said the shares sold were not under Buffett's direct control. "One of the managers other than Warren had a position in Apple and sold part of it in order to make an unrelated purchase," she said in an email to Reuters. "None of the shares under Warren's direction have ever been sold."
Hedge funds are bailing on Apple
Still, investors follow what Berkshire buys and sells closely because of Buffett's successful track record, and news of his holdings often moves share prices. At 88 years old, the investing guru is among the richest people in the world, worth an estimated $87 billion.
Some hedge funds have also reduced their exposure to Apple recently, according to Reuters:
- Jana Partners reduced its stake in Apple by approximately 175,000 shares, or 63% of its position.
- Soros Fund Management and David Tepper's Appaloosa Management have exited their holdings of AAPL.
Apple has struggled to keep investors excited. In its most recent earnings call, it announced that revenue from the iPhone, its main product, had declined 15%. It also missed its overall revenue guidance. The era of robust smartphone growth seems to be over as the market matures, reaching close to 100% saturation among consumers.
It's a sharp charge from last year. Buffett helped send Apple shares to a record high in May, making it the first trillion-dollar company, after loading up on Apple shares.
Apple's fortunes turned later in the year - its shares slid 30% from an October high while its holiday-season sales underwhelmed.
Buffett is a bit of a technophobe
Buffett is known to be skeptical on tech. Buffett doesn't keep a computer on his desk, and he chooses to use a flip phone rather than a smartphone. He's shied away from Google or Amazon shares.
"Buffett cares much more about the underlying fundamental strength of a company and its leadership than what is happening with the company's stock price," Owen Murray, the director of investments at Horizon Advisors, told US News & World Report this week.
The US magazine outlined his investing philosophy: "He loves to identify companies with durable, competitive advantages in their respective industries."
Now he is looking at banks and Red Hat
Buffett has also made contrarian moves against the rest of the market, such as his $5 billion investment in Bank of America in the wake of the 2008 financial crisis.
Buffett is bullish on banks again. The filing showed the Omaha, Nebraska-based Berkshire Hathaway increased its holdings in JPMorgan and Bank of America Merrill Lynch despite a 14% drop in the S&P 500 Financials Index in the fourth quarter.
Apple has had a strong start to 2019, with its shares 8% up this year.
Other disclosures on Berkshire's holdings, per the filing:
- He added 4.2 million shares in the software firm Red Hat, which was acquired by IBM on October 29. It's unclear whether the company had the shareholding before or after the $34 billion acquisition.
- Berkshire Hathaway also increased its holdings in the regional lenders PNC Financial Services and US Bancorp.