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Warren Buffett's Berkshire Hathaway Trims Apple Position in Q3

By Evan Niu, CFA - Nov 16, 2019 at 3:00PM

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The Oracle of Omaha tweaks his investment in the Mac maker.

Warren Buffett has become one of Apple's (AAPL -2.98%) biggest bulls in recent years. In fact, Apple is Berkshire Hathaway's (BRK.A -1.32%) (BRK.B -1.63%) largest position by far, worth more than twice as much as the holding company's second-largest position, Bank of America.

While the Oracle of Omaha is confident in Apple's fundamentals, he did express some reservations over the stock's valuation earlier this year. "We aren't buying it here," Buffett said in February when shares were trading below $175. Seeing as how the stock has rallied over 50% since then, it should come as little surprise that Berkshire Hathaway just modestly trimmed its Apple position.

Tim Cook onstage in front of a green iPhone 11 Pro

CEO Tim Cook introduces the iPhone 11 Pro. Image source: Apple.

A 0.3% reduction

Berkshire Hathaway filed its quarterly 13F last week detailing its holdings at the end of the third quarter. The regulatory filing shows that Berkshire Hathaway sold 750,650 shares in Q3. That might sound like a lot (those shares are worth nearly $200 million based on current levels), but the reduction represents a mere 0.3% of the shares that Berkshire Hathaway held at the end of the second quarter.

Chart showing Berkshire Hathaway's Apple holdings

Data source: SEC filings. Chart by author.

Buffett still holds over 248.8 million shares in the tech company, currently worth approximately $65.7 billion. Berkshire Hathaway had left its Apple position alone for two quarters after selling 2.9 million shares in the fourth quarter of 2018, a decision that the famed investor attributed to one of his longtime trusted lieutenants, Ted Weschler or Todd Combs, in order to free up cash for another investment.

With Apple shares continuing to march higher and numerous analysts raising price targets on Friday, it might be a while Buffett is willing to buy more shares considering his previous comments regarding valuation.

Speaking of other investments

Berkshire Hathaway established new positions in RH (RH -4.78%) and Occidental Petroleum (OXY 4.77%). Buffett (or his lieutenants) scooped up over 1.2 million shares of RH, the furniture maker previously known as Restoration Hardware, sending the stock soaring. RH has been struggling over the past couple of years but has been putting together a turnaround while trying to reposition itself as a lifestyle brand.

Berkshire Hathaway had previously committed $10 billion to Occidental Petroleum as part of the latter company's acquisition of Anadarko Petroleum, which closed in August. As part of that deal, Occidental issued 100,000 shares of preferred stock to Berkshire Hathaway in addition to warrants to purchase 80 million shares at an exercise price of $62.50. Some analysts have criticized the Anadarko acquisition, arguing that Occidental overpaid and destroyed shareholder value in the process, but Buffett is clearly unfazed, as Berkshire Hathaway bought nearly 7.5 million common shares of Occidental during the third quarter.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$412,170.01 (-1.32%) $-5,529.99
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$273.86 (-1.63%) $-4.54
Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.44 (-2.98%) $-4.22
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$32.26 (-0.28%) $0.09
Occidental Petroleum Corporation Stock Quote
Occidental Petroleum Corporation
OXY
$61.71 (4.77%) $2.81
RH Stock Quote
RH
RH
$243.79 (-4.78%) $-12.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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