Warren Buffett sells stocks. Here is the hidden reason why.

Any big move Warren Buffett makes could make front-page headlines, and the investing community was abuzz over the weekend with news that Berkshire Hathaway (BRK.A 1.23%) (BRK.B 1.06%) sold almost half =its Apple stock in the second quarter. This came on the back of other big sales in the portfolio.

Let’s see what’s going on and why Buffett might be a seller right now.

Is Buffett done with Apple?

At first glance, you might think Buffett has lost some of his love for Apple, but consider the larger context and you’ll see a different story. Even after the sale, Apple remains by far the largest stock holding in Berkshire Hathaway’s portfolio.

Buffett also made waves by selling Apple shares earlier this year, reducing his Apple holdings from 49% of the portfolio to 44%. At recent prices, it has fallen to around 28%.

Although he cut his stake, Buffett speaks highly of Apple. At Berkshire Hathaway’s annual shareholder meeting in May, he said he expected it to remain part of his portfolio and said it was an even better deal than two other longtime favorites. American Express and Coca cola.

This stock sale seems less about Apple’s concern and more about something else.

Buffett also sold other stocks

Buffett also made waves in recent weeks with the news that he sold a piece of the Bank of America stock and in steps. In July, he sold $2.3 billion of BofA stock over six days. Bank of America remains the second largest in Berkshire Hathaway’s portfolio and represents 11.7% of the total. He still feels good about the bank, having completely exited positions in other banks in recent years.

One stock he continues to buy, however, is Berkshire Hathaway. The company spent nearly $2.6 billion buying back stock in the first quarter, continuing a pattern of investing in itself.

Keep up with interest rates

Armchair analysts aren’t sure why Buffett sold stocks, or these stocks in particular. He said nothing publicly. But he said a few things recently that may give investors clues. At Berkshire Hathaway’s annual meeting, he said:

Unless something dramatic happens that really changes our capital allocation strategy, we’ll have Apple as our biggest investment, but I don’t mind building the cash position at all in the current environment. I think when I look at the alternative of what’s available, the equity markets, and I look at the composition of what’s going on in the world, it looks pretty attractive to us.

Berkshire Hathaway can get an attractive return on the huge cash pile it holds through short-term Treasuries without exposing itself to risk. Mix that with a volatile stock market and it makes a lot of sense to hold cash right now.

But there is another reason.

Are you ready to storm?

Buffett looks for undervalued stocks that the market might miss (in addition to other characteristics). But he’s patient, and if there’s nothing that fits his investment criteria, he doesn’t buy. At the annual meeting, he said: “There were times in my life when I was flooded with so many opportunities that I could have invested everything until nightfall.” But not lately: “I haven’t seen anything that makes sense that moves the needle.”

Does this signal a bigger warning for markets? Not necessarily. Keeping your money in cash is a good enough reason to hold on and wait for attractive opportunities. Even without high interest rates, Buffett has suggested he won’t buy stocks if the value proposition isn’t strong enough.

Image source: The Motley Fool.

Could it be a warning for the markets? It might, because it signals that stocks are overpriced right now. Markets are bound to make corrections if valuations get too high. It’s a cycle that plays out over and over again. So while it could be a signal of an upcoming correction, or even something worse than a correction, it’s not a signal to panic or even worry.

As always, investors can gain knowledge from Buffett’s investment wisdom and approach. But you should remember that Buffett runs a publicly traded holding company, and that means his strategy will differ from that of the average investor. You can buy Berkshire Hathaway stock to benefit from his direct management, but for your personal portfolio, follow his general advice rather than his specific moves.