A few weeks ago, it was reported Warren Buffett's Berkshire Hathaway sold a small chunk of Apple stock among other issues during the fourth quarter that ended Dec. 31.
Buffett sold 10 million shares of Apple or slightly more than 1% of his total position, leaving 905 million shares of the Magnificent Seven stock in the portfolio. Berkshire still holds nearly 6% of Apple stock after the trade.
Berkshire's Apple strategy could end up having a huge impact on the stock. So is the latest cut a rare trim or the beginning of an exit strategy?
Apple Stock Underperforms S&P 500
Shares of Apple tested and fell below the 200-day moving average after Berkshire Hathaway filed its quarterly report with the Securities and Exchange Commission on Feb. 14. Since Berkshire filed its report, known as a 13 -F, Apple has fallen 5%.
Granted, the Magnificent Seven stock was already on its way down, falling after fiscal first quarter results were reported on Feb. 2. Shares then tried to rally but met resistance at the 50-day moving average before falling again.
Apple stock climbed 48% in 2023, but is lower by more than 5% thus far this year. By comparison, the S&P 500 is higher by 6.8% this year after a 24% gain in 2023.
Meanwhile, Jordan Klein, an analyst at Mizuho said he would not be surprised if sentiment turned bearish toward Apple if Buffett sold more shares.
Other stocks that Buffett sold in the fourth quarter — HP and Paramount Global — show mixed outcomes. HP has gained more than 5% since mid-February while Paramount has fallen 6%.
Coca-Cola, Taiwan Semiconductor In Warren Buffett's Berkshire Hathaway
According to AppleInsider, Buffett was a latecomer to the party and didn't purchase Apple stock until 2016. But the Oracle of Omaha was quick to boost the position.
Meanwhile, Buffett's legendary investment in Coca-Cola paid off massively after an initial stake in 1988. Buffett picked the stock because of its brand that gave the stock a "moat" or a competitive edge and also touted that his "favorite holding period is forever."
But the seasoned investor sidelined the portfolio's usual long-term strategy with Taiwan Semiconductor.
Berkshire acquired shares of the Taiwan semiconductor leader in November 2022 only to sell a majority of its holdings by February 2023. Buffett exited the position entirely in May due to geopolitical tensions.
Slower sales in China have been dragging Apple stock. Whether that, along with geopolitical factors associated with China trade, will factor into Buffett's decision making remains to be seen.
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