Famed investor Warren Buffett cut his firm's Apple holdings by 13% in the first quarter of 2023, as analyst consensus was that the iPhone was seeing declining demand.
Warren Buffett [Berkshire Hathaway]
Buffett is not a long-term investor in Apple -- his Berkshire Hathaway firm only started buying Apple stock in 2016 -- but it became a particularly significant shareholder. Warren Buffett also taught both Steve Jobs and Tim Cook about the value of a company buying back its own shares, which it did again after its latest earnings report.
As first spotted by CNBC, however, Berkshire Hathaway's own Q1 earnings report reveal that it has cut its stake in Apple by 13% over the period. Apple remains Berkshire Hathaway's biggest holding, worth around $135.4 billion.
During the first calendar quarter of 2024, analysts consistently downgraded Apple, in particular because of falling iPhone demand in China.
JP Morgan, for instance, cut its target price and said that while Apple will get a boost from introducing AI features to the iPhone, it won't do so until 2025 and the iPhone 15. Morgan Stanley insisted that it remained bullish on Apple, yet also cut its stock price.
Apple's earnings report on May 2, 2024, did confirm that iPhone sales are notably down in China -- but not nearly as bad as the up to 25% decline that was forecast by some. Partly because of the bad sales guesses by analysts baking in losses into the stock before the earnings, Apple's stock price rose sharply after the earnings report, based on the company's resilience with a mix of hardware and software, and the promise of AI features coming soon.
As a consequence, most analysts have reversed their opinion of whether investors should buy Apple stock. Morgan Stanley was the first to raise its target price again, although its new $216 figure is still down from earlier in the year.
There are signs, however, that Warren Buffett's strategy with Apple may not be related to short term issues with the shares and instead is part of the firm's move away from technology firms. The first calendar quarter of 2024 was the second quarter in a row where Berkshire Hathaway sold Apple shares.
In Q4 2023, the investor sold off 10 million Apple shares. That was estimated to be around 11% of its whole stake at the time.
Buffett has also cut Apple shares before, although in 2021 he said a recent round of selling shares had been "probably a mistake."