Even Warren Buffett struggles to time the S&P 500 it seems. His surprising sale of roughly half his Apple stock has cost him a pretty penny in a short period of time.
Shares of Apple jumped 7.5% from June 30, the end of Berkshire Hathaway's most recent trade disclosure window. That translates into missing out on a staggering gain of $6.2 billion since that time, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. And that doesn't include the capital gains tax the sale likely triggered.
Buffett's sale of 389.4 million shares of Apple during the second quarter initially spooked investors. After all, many big-cap tech stocks peaked mid-July and were already selling off. Did Buffett know something the rest of us didn't? But since then, Apple and other tech stocks rallied back — and fast.
"Despite all the macro noise, growth scare last week, Fed 'too late' camp, Buffett cutting Apple stake by 50%, Yen currency trade unwind, market volatility and bear chatter the last few weeks overall tech earnings season was generally robust," says Dan Ives of Wedbush Securities. "And we believe (tech earnings season) further solidifies the AI tidal wave of spending is coming to the shores of the rest of the tech world," said Ives.
Buffett Lightens Up On Apple
The timing and ferocity of Berkshire Hathaway's sale of Apple stock caught many investors off guard.
Buffett's Berkshire Hathaway started accumulating shares of Apple going back to the first quarter of 2016 with 39.2 million shares. And from then on, the famous investor's holding company has mostly aggressively added to its position. By the third quarter of 2018, Berkshire Hathaway owned more than a billion shares of Apple.
But since then, some pruning has happened. Berkshire Hathaway now owns 400 million shares of Apple valued at around $88.7 billion. And despite selling roughly half the shares in the second quarter of this year, Apple remains Berkshire Hathaway's largest single publicly traded position. American Express is a distant second valued at roughly $37 billion.
But Berkshire Hathaway's role as an Apple investor is diminishing. Berkshire Hathaway still owns 2.6% of Apple. That only makes it the fourth largest owner of the stock, though. The top owner is index fund giant Vanguard Group.
Adding Pain To Selling Apple
Selling half the Apple stake was clearly the most costly move made by Berkshire Hathaway in the second quarter. But it's not the only one.
Berkshire Hathaway also sold shares of T-Mobile US, Louisiana-Pacific and Floor & Decor. All these stocks gained since the end of June, too. The value of all those sold shares cost Berkshire Hathaway an additional $23 million in foregone gains — not much for a portfolio of Buffett's size — but a quick loss all the same.
Additionally, the S&P 500 stock Buffett added to during the quarter while selling Apple, Occidental Petroleum, has gone the wrong way. Buffett's additional 7.3 million shares of the energy company fell 8.3% from the end of the June reporting period. That's a quick paper loss of $38.2 million.
Again, that's not the end of the world. But a bigger gain would have make the loss on Apple easier to stomach.
Buffett's Tough Breaks
Foregone losses from sold positions and paper losses on added positions
| Company | Symbol | % ch. From June 30 | Loss from transaction |
|---|---|---|---|
| Apple (sold 49%) | AAPL | 7.5% | -$6,178,615,375.14 |
| Occidental Petroleum (bought 3%) | OXY | -8.3% | -$38,169,145.98 |
| T-Mobile US (sold 11%) | TMUS | 11.2% | -$11,234,700.00 |
| Louisiana-Pacific (sold 10%) | LPX | 15.3% | -$7,990,403.48 |
| Floor & Decor Holdings (sold 17%) | FND | 5.8% | -$4,652,354.00 |
