Warren Buffett, the world’s most successful and closely-watched investor, shied away from tech companies for years. The famously cautious investor often said he only invests in businesses he understands, and tech wasn’t his forte.
That changed in 2016 when Buffett’s company, Berkshire Hathaway, started investing in Apple, purchasing $1 billion of shares. By 2017, Berkshire’s investment had grown to over $28 billion. In total, Berkshire has spent $40 billion on its Apple stake. Since then, Apple’s stock price has soared by roughly 800 percent.
In an SEC filing on Saturday, Buffett revealed that he had sold almost half of his Apple stock, netting $76 billion. Earlier this year, the company sold a smaller number of shares, bringing the total sold this year to more than 500 million shares, representing 56 percent of Berkshire’s total Apple stake.
Despite Buffett’s late entry into the tech sector, his timing has proven to be incredibly profitable. Apple has significantly boosted Berkshire’s portfolio, becoming its largest holding even after the recent sale, with a total market cap of $3.3 trillion.
Buffett did not specify why he’s selling Apple’s stock now, but his past remarks provide some clues. At Berkshire Hathaway’s most recent annual meeting, Buffett addressed the company’s growing cash reserves: “We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money.”
Those six words—”make us a lot of money”—are crucial. As much as Buffett values Apple as a company and an investment, his primary goal is to maximize shareholder returns. With Apple’s stock at an all-time high, it’s a strategic move to capitalize on its peak valuation.
Buffett’s decision may also be influenced by tax considerations. He has previously indicated selling “a little bit” of Apple’s shares to potentially avoid higher future tax rates. By taking a certain profit now, he avoids the uncertainty of future market conditions.
This move is less about losing faith in Apple and more about strategic leadership. Buffett has often praised Apple’s management, particularly Tim Cook’s leadership. However, effective leadership sometimes means letting go of even the best investments to seize new opportunities.
The lesson here is clear: great leadership requires the willingness to make tough decisions, including letting go of valuable assets when it’s the right move for the business. Buffett’s actions underscore the importance of strategic flexibility and the constant pursuit of new opportunities to maximize returns.
