By Karen Langley
Warren Buffett's Berkshire Hathaway sold more Apple stock in the third quarter.
The Omaha, Neb., company ended September with $69.9 billion of the iPhone maker's shares, according to a quarterly report released Saturday. That means Berkshire sold about 25% of the 400 million Apple shares it brought into the third quarter.
Even after the sales, Apple was Berkshire's largest stockholding at the end of September. Apple has been a major bet for Berkshire, and one that paid off big time as tech-hungry investors drove the stock ever higher in recent years.
This year, Berkshire has slashed the position, though Buffett has continued to praise the company. He told an arena of shareholders at Berkshire's annual meeting in May that Apple was "an even better business" than American Express and Coca-Cola, two other big holdings, and hinted that tax considerations might have played a role in the decision to sell some shares.
Apple shares are up 16% this year and trading near records.
Chris Bloomstran, president and chief investment officer of Semper Augustus Investments Group, which has owned Berkshire shares since 2000, said he expected the company continued to sell Apple in the third quarter.
Bloomstran said Apple's stock has been too expensive given that he doesn't expect its business to grow as rapidly as in the past. Apple traded late this week at roughly 30 times its projected earnings over the next 12 months, above a 10-year average of about 20 times, according to FactSet.
"It's trading at a price at which Warren determined the economics don't merit as big of a position as it was," he said.
Berkshire's mountain of cash grew to a record $325.2 billion, including equivalents, at the end of September, the company's financial statements show. The enormous cash pile gives Buffett ample ammunition should he spot an appealing company to add to the Berkshire empire. But it also shows the challenge he faces finding good investments that are attractively priced.
Buffett's company didn't buy back any stock in the quarter, a first since 2018, according to FactSet. Its buybacks had slowed to a trickle in recent months after many quarters of sizable repurchases. Class B shares have rallied 27% this year, compared with a 20% gain by the S&P 500, and even some loyal shareholders say the stock looks a little pricey. The company's market value crossed the $1 trillion threshold earlier this year, though it has traded below that level recently.
"He's patient enough to wait for better prices," Bloomstran said. "The same goes for buying Berkshire shares."
Berkshire also reduced its Bank of America position in the third quarter, and continued to sell in October. Since Berkshire owned more than 10% of the bank, it was required to quickly report trades. But recently disclosed sales brought its stake just below 10%, so observers might not learn whether Berkshire continues to sell Bank of America until a Form 13F filing due in February.
Beyond its massive investment portfolio, Berkshire owns and operates a range of businesses including insurer Geico, BNSF Railway and sportswear maker Brooks Running.
Berkshire posted net income of $26.3 billion, or $18,272 a class A share equivalent, swinging from a net loss of $12.8 billion, or $8,824 a share, in the year-earlier period.
Operating earnings, which exclude some investment results, fell to $10.1 billion from $10.8 billion last year. Buffett has said operating earnings are the better measure of Berkshire's performance. Accounting rules require the company to include unrealized gains and losses from its investments in net income, so a rally or pullback in the stock market can obscure the results of the businesses Berkshire runs.
Write to Karen Langley at karen.langley@wsj.com
(END) Dow Jones Newswires
November 02, 2024 08:48 ET (12:48 GMT)
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