Based on Barron's claim that they (not Buffett directly but one of his people) accumulated this side stake mostly in 2016-2018, they got a 5.5x result on these shares roughly speaking. So selling half sounds fair as profit taking, from a manager who may not be in the "hold forever" school of thought.
I'm at least a little glad to see that, for me there's the weird kind of indexy thing where you want Berkshire to sort of be differentiated from the market. So much is indexed, you want the 'other stuff' to be not quite the index, which at their size is probably a tall order.
Obviously it's up to them. But to me there's a little temptation that if you're going to be this kind of 'pocket universe economy' for lack of a better term that it tries to be a little less straight beta.
I don't want to open it up and see "hey 20% of your maket cap is just apple? I already have a lot of that, can't you have something else?". Which firmly falls into the camp of not their problem.
So I guess now it's only 10% of its market cap, so progress :)
Is any of that relevant when this selling is an ongoing trend to have as much cash on hand. Buffet is amassing 200+ billion… for what exactly? The holdings in general are optimized and factor in data from Aladdin.
It could be he thinks this is as good as it's going to get for a while, don't know.
At this point I usually look at the cash as being as much directly insurance related as it is business/investing related.
They are a massive insurance and reinsurance writer.
Does this actually mean anything? Apple has plenty of cash to do whatever it wants. I don't think it lives or dies by the whims of investors, and Buffet's main ambition in life is running up the score. Taking money out of a company that's probably done growing quickly but still doing okay to spread around makes sense.
In regular trading shares don't go to or from a company but rather changes hands between investors, so BsH selling off won't affect their cash reserves (unless it's part of an IPO, funding round or buyback).
Looking at the article he's probably feeling that things are overvalued in general and is building a war-chest to scoop up stocks at a discount after a slump or crash.
Apple has a market cap of 3.43 trillion and a PE of 34.19. If you think that Apple is "probably done growing quickly but still doing okay" then Apple has an absolutely unsupportable valuation.
I think you may be misunderstanding how stocks work.
This isn't taking money/cash out of Apple -- Apple's cash is entirely unaffected.
This is just Berkshire selling some of their shares of Apple to other people who now own those same shares insteads. All the money Berkshire gets in these sales comes from the buyers, not from Apple.
Berkshire flooding the market with Apple shares causes those shares to drop in value. GP is saying that Apple is more insulated from that sort of price drop because they’re sitting on a mountain of cash. A smaller company (think Peloton) is much more affected by their stock price dropping because they use the value of the stock to raise capital that they need. GP understands what they’re saying.
Berkshire already sold these stocks though. They’ve been selling for the past several months. It’s not in their best interest to do a sudden dilution for exactly the reason you mentioned.
The current stock price is after the sales, but before the news of the sales. Any reaction now would be a reaction to the news and not the effects of the sale itself.
I do think this is less a signal about Apple than it is about Berkshire. Buffett's motto has been "be greedy when other people are fearful and fearful when others are greedy". It feels like we have been in the greedy phase for quite a while now.
Every very large company stops growing quickly, as there is a global ceiling on trade. That's why investment managers recommend a good amount of a portfolio be in small companies; they have a lot more room for growth.
"In all, Berkshire sold $75.5 billion worth of stock during the second quarter on a net basis, the Omaha, Nebraska-based conglomerate reported Saturday."
doesn't berkshire also get typical or possibly better than typical interest rates on cash holdings? It's not like that cash is doing nothing, even if held as cash.
