Sell Apple, cash out 13.1 billion! Buffett suddenly made a big move, what signal?

Sell Apple, cash out 13.1 billion! Buffett suddenly made a big move, what signal?

As the "god" of the stock market, Warren Buffett has practiced the four words "value investing" throughout his life.

Apple is Buffett's "finale", and the rise and fall of this company can easily affect the outside world's evaluation of Buffett.

On February 15, Warren Buffett's company Berkshire Hathaway announced the fourth quarter of 2023 U.S. stock position report (13F), which showed that Berkshire reduced its holdings of about 10 million Apple shares in the fourth quarter, and the market value of Apple's shares reduced by Berkshire was about 1.822 billion US dollars (about 13.1 billion yuan) according to the average price during the reporting period.

This reduction caused an uproar in the market. As Warren Buffett's "favorite", it is easy to give the outside world a bearish signal by choosing this position to cash out. In fact, there are quite a few media outlets who think so.

Sell Apple, cash out 13.1 billion! Buffett suddenly made a big move, what signal?

They believe that as U.S. tech stocks continue to rise, considerable risks have accumulated, and the bubble of U.S. tech stocks could burst at any time, and Warren Buffett's reduction is a signal.

Of course, judging from Buffett's overall holdings, this view also seems untenable.

According to Berkshire's overall holdings in the fourth quarter, as of the end of December 2023, Berkshire's total U.S. stock holdings were about $347 billion, an increase of about $34 billion from $313 billion in the previous quarter. The top 10 holdings accounted for 92.92%, of which Apple alone accounted for 50.19%.

Berkshire's holdings of Apple are worth about $180 billion.

In other words, the proportion of Apple holdings this time is relatively small.

In addition, according to the position disclosure, Berkshire's top 10 heavy stocks are: Apple, Bank of America, American Express, Coca-Cola, Chevron, Occidental Petroleum, Kraft Heinz, Moody's, Davita Healthcare, and Citigroup. Investors familiar with Warren Buffett know that in the past seven or eight years, there has been little significant change in his heavy stocks, and Buffett increased his holdings of Chevron by 16 million shares in the fourth quarter, and has also carried out a series of reductions in previous quarters.

From this, we can judge that Buffett's reduction in Apple in the fourth quarter does not seem to explain anything, but only some reasonable allocation of the company's position. For the proportion of its holdings, the amount of this change is not too large, which means that Buffett's reduction behavior is likely to be overinterpreted by the market.

Heavy storage of apples, blossoming and fruiting

Will Warren Buffett massively reduce Apple's holdings in the future, and will he change his "bias" against technology stocks?

Missing the feast of technology stocks, Buffett has been criticized by the outside world. Ten years ago, the success of Amazon and Facebook made Buffett have been stuck in the argument of "cheap and old".

Warren Buffett once said, "High-tech companies are changing so fast that I have no idea whether the sustainable competitive advantage of companies will be maintained in the next decade." ”

Based on this, he has always maintained a "respectful and distancing" attitude towards technology companies.

It wasn't until 2016 that Buffett's choice of technology stocks seemed to change.

In 2016, Warren Buffett made up his mind to buy Apple, and his behavior was quickly ridiculed by Wall Street. From the perspective of performance, Apple happened to be at the inflection point of performance at that time, and Wall Street was not a few bearish voices on Apple at that time, so this decision was considered a sign of stupidity.

But in the face of Wall Street's ridicule, Buffett ignored it.

Relevant statistics show that from 2016 to 2018, Berkshire spent a total of $36 billion to buy a 5% stake in Apple, and this investment ultimately proved Buffett's vision.

Sell Apple, cash out 13.1 billion! Buffett suddenly made a big move, what signal?

Over the next four or five years, the investment helped Berkshire shareholders earn at least $100 billion.

In a later interview, Buffett explained why he bought Apple, arguing that Apple is a consumer goods company that uses technology and that it belongs to the consumer goods industry.

In other words, the logic of Buffett's purchase of Apple is still not technology, but consumption.

At Berkshire's shareholder meeting in 2021, he did not hesitate to praise Apple, arguing that Apple is an extraordinary company, they have excellent management, their products have loyal fans around the world, Apple's brand and products are outstanding, and the profit margins are very high. At the same time, mobile phones are an essential and must-have in the lives of all young people.

At Berkshire's shareholder meeting in 2023, Buffett further said that he made some mistakes two years ago and sold some Apple shares, "that decision was stupid at the time."

Today, Berkshire owns more than 50% of its total Apple stockholding, which is about $165 billion at the current stock price.

Although Apple's stock price performance has not been satisfactory recently, it has fallen significantly behind in the camp of large technology companies in the United States, and has lost the crown of the most valuable company in the United States, Kanjian Finance believes that in the past five years, the possibility of Berkshire's large-scale reduction in Apple is still very small, and before Apple's fundamentals have changed significantly, Berkshire's holdings will probably not be significantly adjusted.

Warren Buffett's "favorite"

Aside from the position of Apple, Buffett's holding style will most likely not change significantly in a short period of time.

The preference for consumer stocks, energy stocks, and bank stocks has also benefited Buffett.

Stretching the long-term axis, consumption and energy have always been Berkshire's number one choice, especially after Apple, during the epidemic, Buffett's preference for energy stocks has been very obvious.

As the most cyclical industry, Warren Buffett has not suffered without its pains.

Back in 2008, Berkshire lost a lot of money on its investment in ConocoPhillips, and in 2014 it also had a hard time in oil stocks.

At the time, Buffett also assured shareholders that "lessons have been learned."

Sell Apple, cash out 13.1 billion! Buffett suddenly made a big move, what signal?

But since 2021, Buffett's investment in oil stocks has entered a state of "madness".

As it turns out, Buffett didn't make a mistake in his choice.

According to statistics, oil and gas giants such as ExxonMobil, Chevron, Shell, Total and BP earned a total of nearly $200 billion in high profits in 2022, which is 50% higher than the annual record set more than a decade ago.

But this ultra-high return did not last.

After entering 2023, the revenue of many oil and gas companies began to fall, and the stock price entered a sideways period, but Buffett did not choose to take profit, but continued to raise it.

Occidental Petroleum, in particular, has now become the largest shareholder of Occidental Petroleum. And this increase has not stopped, and in October 2023, Berkshire continued to increase its holdings of 3.9 million shares of Occidental Petroleum at an average price of about $63 per share.

Berkshire has even received regulatory approval to acquire up to 50% of the company's shares.

Kanjian Finance believes that the most important reason why Buffett dares to make a large investment in stone in the past two years is that it is difficult to increase production capacity.

Previously, Chevron's CEO Mike Wirth said in an interview: "You're thinking about a 10-year capital investment and it will take decades to deliver returns to shareholders, and the current policy environment is where governments around the world are saying: We don't want these products." ”

In the fourth quarter, Berkshire continued to increase its holdings in Occidental Petroleum and Chevron, which seems to confirm this view.

It is reported that Berkshire has received permission from the SEC for the second consecutive quarter to temporarily keep one or more of its holdings secret. It occasionally asks for such treatment when it makes large investments, including billions of dollars in shares in Chevron, ExxonMobil IBM and Verizon Communications.

Kanjian Finance believes that as one of Buffett's favorites, his actions in energy stocks will inevitably be no less. But looking at its overall holdings, a large-scale movement is almost unlikely. As Buffett's "finale", the current portfolio structure may continue until his retirement.

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