‘Sage’ of Omaha cuts Apple stake, boosts cash holding to record level

Warren Buffett is sitting on more than $325bn (€298.15bn) cash after unloading billions of dollars worth of Apple shares this year while continuing to collect a steady stream of profits from all of Berkshire Hathaway’s assorted businesses without finding any major acquisition.

Berkshire Hathaway has revealed it sold off some 100 million more Apple shares in the third quarter after halving its massive investment in the iPhone maker last quarter.

The remaining stake of roughly 300 million shares was valued at $69.9bn (€64.12bn) at the end of September and is still Berkshire’s biggest single investment. However, it has been drastically cut since the end of last year when it was worth $174.3bn (€159.9bn).

Investors may be disappointed to learn that Berkshire didn’t repurchase any of its own shares in the quarter.

CFRA Research analyst Cathy Seifert said shareholders will wonder why Buffett is continuing to accumulate so much cash. “Are they more pessimistic about the future economic and market picture than perhaps others are?” she said.

Sell-off fuelled by expectation of future tax hikes

Buffett said at the annual meeting in May that part of why he started selling some of his Apple shares is that he expects tax rates to go higher in the future.

But Edward Jones analyst Jim Shanahan said he wonders if part of the reason Buffett started selling Apple is tied to last year’s death of vice-chairman Charlie Munger because the sales started shortly after Munger’s death.

Shanahan said Buffett has never been as comfortable with technology businesses as his longtime partner was.

“If Charlie Munger were still alive, perhaps he wouldn’t have sold down the position quite as aggressively – maybe at all,” Shanahan said.

Berkshire said on Saturday that investment gains again drove its third quarter profits skywards to $26.25bn (€24.08bn).

A year ago, unrealised paper investment losses dragged the Omaha, Nebraska-based conglomerate’s earnings down to a loss of $12.77bn (€11.71bn)

Buffett has long recommended that investors pay more attention to Berkshire’s operating earnings if they want to get a good sense of how the businesses it owns are doing because those numbers exclude investments.

Berkshire’s bottom-line profit figures can vary widely from quarter to quarter along with the value of its investments regardless of whether the company bought or sold anything.

By that measure, Berkshire said its operating earnings were only down about 6% at $10.09bn (€9.26bn) That compares with last year’s $10.8bn(€9.91bn).

Berkshire owns an assortment of insurance businesses, including Geico, along with BNSF railroad, several major utilities and a varied collection of retail and manufacturing businesses, including brands like Dairy Queen and See’s Candy.