It was the stock sale heard 'round the world.
In the second quarter of 2024, Warren Buffett sold roughly $90 billion of Berkshire Hathaway's Apple (NASDAQ: AAPL) shares. This comes on the heels of Berkshire also selling blocks of its Apple stock in the fourth quarter of 2023 and the first quarter of 2024.
What was Buffett thinking? And could selling so much Apple stock be the biggest investing mistake he's ever made?
Possible good reasons for selling Apple
Let's first look at why Buffett might have sold 390 million shares of Apple in Q2. Some could think the legendary investor has soured on the company. However, I don't believe that's the case.
Sure, Buffett wrote in his 1988 letter to Berkshire shareholders, "[W]hen we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever." The fact that he sold nearly half of Berkshire's stake in Apple in Q2 could seem to indicate that he no longer views the business or its management team as outstanding.
But Buffett said at Berkshire's annual shareholder meeting in May that American Express and Coca-Cola were "wonderful business[es]." He added, "And we own Apple, which is an even better business." Buffett said this with Apple CEO Tim Cook sitting in the audience. The statement doesn't sound like the words of a man who doesn't like Apple's business or its management.
Perhaps Buffett sold Apple because of valuation concerns. Maybe he wanted to increase Berkshire's cash stockpile (which now stands at nearly $277 billion) to buy a business that he thinks is an even better opportunity.
Or possibly Buffett expects taxes to go up substantially in the future and selling now allows Berkshire to keep more profits. He hinted at this rationale at the Berkshire shareholder meeting.
Whatever Buffett's reasons for selling Apple, could it be his biggest investing mistake ever? My answer to this question is: I don't know. I believe that's the best answer.
Different investors can make different decisions about buying, holding, or selling any given stock. And their different decisions can be the right one for them.
Before Berkshire reported its Q2 results, Apple made up 43% of the conglomerate's total portfolio. As much as I like Apple (it's the biggest stock position in my portfolio), I wouldn't feel comfortable having it make up that high of a percentage of my holdings. However, Buffett didn't have a problem with having so much money invested in Apple for years.
We don't know what Buffett plans to do with the money raised from selling Berkshire's Apple stock. As I mentioned earlier, he could have what he thinks is a better investment opportunity in mind. It's never a mistake to sell a stock when you can put your money to better use.
A better question
Although I've focused so far on whether or not selling $90 billion of Apple stock could be Buffett's biggest investing mistake, I think there's a better question to ask. That question is: Will Apple continue to be a good stock to own for investors?
This is an important question for many investors -- including Buffett. Apple remains by far Buffett's biggest holding.
In my view, the answer to this question is a resounding "yes." My confidence stems largely from Apple's new artificial intelligence (AI) capabilities.
Wedbush wrote to investors last week, "Our view is betting against Cook and Cupertino into an AI-driven supercycle led by iPhone 16 and Apple Intelligence is the wrong move for investors as the renaissance of growth returns to the Apple story." I agree with this take 100%.
Maybe Buffett made a mistake by selling so much Apple stock; maybe he didn't. However, I think anyone who underestimates Apple right now is making a mistake that could cost them over the next several years.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Warren Buffett Just Sold $90 Billion of Apple Stock. Could This Be the Biggest Investing Mistake He's Ever Made? was originally published by The Motley Fool