Warren Buffett shares: Coke parallel may be a clue for Apple

A striking detail in Berkshire Hathaway’s stock portfolio has caught the attention of Wall Street as investors look for clues about what CEO Warren Buffett might do next.

“Berkshire owned exactly 400,000,000 shares of Apple and 400,000,000 shares of Coca-Cola as of June 30, 2024,” David Kass, professor of finance at the University of Maryland’s Robert H. Smith School of Business, wrote Wednesday. “If Buffett likes round numbers, he may not plan to sell additional Apple shares.”

In an email to wealthKass acknowledged that the numbers may just be a coincidence, but said he believes Buffett is signaling that he’s done selling and “plans to hold onto his Apple stock indefinitely,” similar to his Coca-Cola holdings.

“Since Buffett said the CEO is the chief risk officer, I think Buffett acted in a prudent manner by reducing the weight of Apple’s portfolio from 50% to 30%,” he added, noting that Berkshire’s initial Apple investment about 30 dollars. billion appreciated to approximately 180 billion dollars.

Buffett’s followers – and investors in general – have been puzzled about his possible intentions after the conglomerate revealed a nearly 50% reduction in its Apple stake earlier this month. While analysts don’t think it will completely offload the rest of its Apple stock, the dramatic cut in the second quarter has raised questions about further cuts.

Of course, while Berkshire now owns the same number of shares in Apple and Coca-Cola, the value of those stakes is vastly different. At Friday’s closing prices, Apple’s stake was worth $90.4 billion, while Coca-Cola’s stake was $27.7 billion.

According to Kass, Apple accounted for nearly 50 percent of Berkshire’s equity investments at the end of the second quarter, while Coca-Cola accounted for 9 percent.

But because Coca-Cola is Buffett’s oldest and longest-standing stock position, which has held steady for decades, the symmetry of his Apple stock was too juicy to ignore, as CNBC and Wall Street Journal also picked up on Kass’s tweet last week.

In addition, Buffett is an ardent fan of Coca-Cola, reportedly drinking five cans of Coke a day, while he is also an iPhone user and has praised Apple for how loyal its customers are.

Berkshire Hathaway representatives did not immediately respond to a request for comment.

Analysts viewed the sale of Apple stock as a risk management move, noting that it ended up taking up a large portion of the portfolio through valuation. In fact, it followed earlier moves to trim the portfolio. In May, Berkshire disclosed the sale of 100 million Apple shares, worth 13% of its stake at the time.

CFRA Research analyst Cathy Seifert said wealth Last week, the latest sell-off in Apple shares represented a “classic portfolio rebalancing.”

With Berkshire’s portfolio so heavily skewed toward a handful of stocks like Apple, there was a risk of overconcentration, she explained. There may also have been some profit-taking involved, as the sell-off occurred as the broader stock market hit record high after record high.

The stock dump helped boost Berkshire’s cash pile to a new high of $277 billion by the end of the second quarter, and Kass pointed out on X that it nearly matched its $285 billion in investments. dollars in shares in total.

But despite his latest moves, Buffett is still considered more of a buy-and-hold investor and hasn’t done as much shuffling compared to his peers.

“Over the past decade, Berkshire’s average portfolio turnover rate has been quite low, often ranging between 5% and 10% per year,” Kass tweeted. “The average turnover rate of large-cap managed equity funds over the past 10 years typically ranges between 30% and 60% per year.”

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