Blue Whale News, August 4th (Reporter Ao Yulian) Selling apples and storing cash is one of Buffett's investment themes for the first half of 2024.
On the evening of August 3rd Beijing time, Berkshire Hathaway, a subsidiary of Warren Buffett, released its Q2 2024 financial report: net profit of $30.348 billion and revenue of $93.653 billion, both exceeding market expectations.
The most noteworthy thing is that Berkshire Hathaway sold 389 million shares of Apple Inc. in the second quarter, with a sales volume of 49%, which was unexpectedly large. At the end of the second quarter, Berkshire Hathaway's cash reserves reached a new high of $276.9 billion.
Apple's position reduced by 49%
Berkshire Hathaway's Q2 financial report showed a net profit of $30.348 billion, compared to $35.912 billion in the same period last year, far exceeding market expectations of $17.786 billion; Revenue was $93.653 billion, compared to $92.503 billion in the same period last year, exceeding market expectations of $91.09 billion.
Meanwhile, Berkshire's investment income in the second quarter was $18.75 billion, compared to $25.869 billion in the same period last year.
At the trading level, at the end of the second quarter, Berkshire Hathaway held approximately 400 million shares of Apple Inc., a 49% sell-off from 789 million shares at the end of the first quarter. The market value of holding Apple is $84.2 billion, a decrease of about 52% from $174.3 billion at the end of the first quarter. As of the end of the second quarter, Berkshire Hathaway held approximately 2.6% of Apple's shares.
The selling behavior in the second quarter of 2024 was expected by the market, but the extent of the selling approaching a "halving" was still unexpected.
Starting from the fourth quarter of 2023, Berkshire Hathaway's significant sale of Apple stocks has attracted market attention. In the fourth quarter of 2023, Berkshire Hathaway sold nearly 10 million shares of Apple stocks. By the end of the first quarter of 2024, Berkshire Hathaway's Apple holdings had decreased from $174.3 billion to $135.4 billion, with institutions estimating a reduction of nearly 116 million shares. Now about 389 million shares have been sold, with a significant quarterly expansion in magnitude.
The outside world is paying close attention to Buffett's sale of Apple. At the shareholders' meeting in early May 2024, Buffett gave some reasons: increasing cash positions and the possibility of an increase in capital gains tax.
Buffett stated that the federal capital gains tax rate was 21% in early May, up from 35% recently and even as high as 52% in the past. He is concerned that as the government seeks to narrow the budget deficit, the capital gains tax rate may increase again in the future. Therefore, selling Apple stocks at a lower tax rate can lead to timely profits.
Returning to Apple itself, Buffett stated that the value of Apple has not changed. At the end of this year, Apple will still be Berkshire Hathaway's largest investment unless there is a dramatic event that changes the investment logic
Despite reducing its position by 49% in the second quarter, Apple remains Berkshire Hathaway's largest holding.
As of the end of the second quarter, Berkshire Hathaway's top five investments were Apple Inc. ($84.2 billion), Bank of America ($41.1 billion), American Express (approximately $35.1 billion), Coca Cola ($25.5 billion), and Chevron ($18.6 billion), with the same ranking of heavy holdings as in the first quarter.
Cash reserves hit a new high of $276.9 billion
According to the financial report, Berkshire Hathaway sold a net of $75.5 billion worth of stocks in the second quarter.
While reducing stock positions, cash reserves reached a new historical high of $276.9 billion, an increase of 31.74% from $189 billion at the end of the first quarter.
Buffett revealed at the shareholders' meeting in early May that he would continue to expand his cash position, stating at the time that this figure could reach $200 billion by the end of the second quarter.
The increase in cash reserves may be related to the difficulty in finding investment targets. Buffett stated at the shareholders' meeting that he would not spend this money unless he could currently find investment targets with minimal risk and substantial returns.
I won't use this money at such a high interest rate of 5.4%, just swing a swing at the right time. "In early May, Buffett mentioned that currently interest rates are high, and the return on risk-free assets such as cash is also relatively high. However, Buffett also joked that even with current interest rates of only 1%, he would still hold a large amount of cash. Considering the difficulty in finding investment targets in the market and global uncertainty, storing cash is currently a better choice.
In the second quarter, Apple's holdings halved, and so far in the third quarter, Berkshire Hathaway has shifted its selling focus to its second largest holding, Bank of America.
According to recent information disclosed by the SEC, Berkshire Hathaway sold Bank of America for 12 consecutive trading days from July 17 to August 1, selling a total of approximately 90.42 million shares, or $3.8 billion. At present, Berkshire Hathaway still holds 942 million shares of Bank of America, making it the largest shareholder of Bank of America.