Berkshire Hathaway beats earnings estimates, sells stock in Apple

Key points

• Berkshire Hathaway stock was down 3% on Monday.

• The company run by Warren Buffett beat earnings and revenue estimates.

• It sold a big chunk of Apple stock, its largest holding.

The conglomerate run by Warren Buffett made some major moves in the second quarter.

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate run by Warren Buffett, beat earnings estimates in its fiscal second quarter and made some major moves within its $285 billion stock portfolio.

The biggest move made last quarter was to sell a huge chunk of its stake in Apple (NASDAQ: AAPL). Apple remains Berkshire Hathaway’s largest holding, accounting for roughly 29% of the portfolio.

Berkshire Hathaway also beat earnings estimates in the quarter, generating $93.6 billion in revenue, up 1.2% year-over-year. This outpaced estimates of $91.1 billion. Also, its adjusted earnings came in at $5.38 per share, which easily beat estimates of $4.61 per share.

However, Berkshire Hathaway stock was down more than 3% on the day, due mostly to a massive selloff that saw the Dow Jones Industrial Average plunge more than 1,000 points, or 2.7%, while the Nasdaq was off 655 points, or 3.9%, and the SEP 500 fell 174 points, or 3.2% as of late Monday.

Selling Apple

Apple has long been Buffett’s largest holding, but its position is much smaller today than it was at the start of the year. At the end of 2023, Berkshire Hathaway held about 49% of its portfolio in Apple stock, or $174 billion of the $353 billion portfolio.

In the first quarter, Buffett pared back his stake in Apple by about 13% to $135 billion, but it still made up around 40% of the portfolio.

In the second quarter, the company sold another $50 billion in Apple stock, and it now owns about $84 billion in the iPhone maker’s stock, which accounts for about 29% of the portfolio. Since the beginning of the year, the company has sold more than half of its stake in Apple. Apple stock was down 5% on the day.

The company typically doesn’t elaborate on its moves, but perhaps more can be gleaned later this month when the company files its 13F form with the SEC, which details its quarterly portfolio moves.

Buffett apparently did not swap in another stock after selling Apple, as the portfolio is down to $285 billion, from $331 billion at the end of Q1. Buffett now has a massive pile of cash on the sidelines, about $277 billion – a record for the company. That means that Berkshire Hathaway has almost as much sitting in cash as it does have invested in stocks.

Most of the cash, roughly $234 billion, is in Treasury bills, up from $129 billion at the end of 2023.

What that could tell us is that Buffett foresaw the overheated market and perhaps anticipated the correction we have seen over the past few weeks. With so much invested in the safety of Treasury bills, Buffett and his team are content to generate the 5% yields that Treasury bills are paying out.

Dumping Bank of America, too

Bank of America (NYSE: BAC) is Berkshire Hathaway’s second largest position, with $41 billion invested in the bank stock as of June 30, or 14% of the portfolio. But this quarter, Buffett has been selling off Bank of America, too.

Last week, Buffett sold roughly 38 million shares of Bank of America and earlier this month he sold another $18 million shares, according to SEC filings.

It was likely a case of the company taking profit, as the bank stock had been up about 25% into July, before the market started tanking in recent weeks.

Steady hand at the wheel

As for Berkshire Hathaway stock, it is still up about 16% year-to-date, even after Monday’s selloff. Buffett has built a company over the years that is designed to weather volatile markets, so investors can expect a steady hand at Berkshire Hathaway’s wheel, guiding it through this turbulence.

While the company’s stock portfolio may be more volatile, the earnings from the companies that Berkshire Hathaway outright owns were up 16% to $11.6 billion. That’s because Warren Buffett and his team focus on companies that are resilient, well-managed, efficient, and come from a variety of industries. These qualities allow the portfolio of private holdings to navigate the market’s ups and downs.

Berkshire Hathaway is always a good stock to have in your portfolio, particularly now.