While it wasn’t the largest move in terms of the dollar amount, one of the biggest surprises in Berkshire Hathaway’s (NYSE:BRK-A) (NYSE:BRK-B) latest 13-F filing was that the company sold nearly three million shares of tech heavyweight Apple (NASDAQ:AAPL) during the fourth quarter of 2018.
This caught many investors off-guard. After all, Berkshire has added to its Apple investment in nearly every quarter since it was first added to the portfolio a few years ago, and CEO Warren Buffett has said that he likes Apple so much that he’d love to own the entire company if he could.
Image source: The Motley Fool.
To be clear, this sale wasn’t a particularly large portion of Berkshire’s Apple investment. Sure, the 2,889,450 Apple shares Berkshire unloaded are worth about $491 million at the current market price, and were probably worth even more when they were sold during the fourth quarter.
Nearly half a billion dollars is a lot of money, but it’s important to put this in perspective. The shares Berkshire sold represented just over 1% of the company’s overall Apple investment. Apple is still the largest stock holding owned by Buffett and company by a wide margin, with the 249.5 million shares the company still owns making up more than 21% of Berkshire’s portfolio.
Did Buffett actually hit the sell button?
The morning after the 13-F was released, we got a little more clarity on what happened with the transaction. In an email to Reuters, Warren Buffett’s assistant Debbie Bosanek said that Buffett wasn’t the one who sold the shares. “One of the managers other than Warren had a position in Apple and sold part of it in order to make an unrelated purchase,” she said.
Bosanek also clarified that “none of the shares under Warren’s direction have ever been sold.”
Berkshire’s stock-picking lieutenants
This may sound a bit confusing, especially if you’re unfamiliar with how the responsibility for selecting Berkshire’s stock investments is divided.
For the majority of Berkshire’s modern (Buffett-led) history, the stock portfolio was Warren Buffett’s thing – period. In other words, when Berkshire bought stocks, it was generally understood that Buffett himself made the moves.
In recent years, as part of Berkshire’s succession plan, Berkshire has gradually shifted more of the stock-picking responsibility to Buffett’s two trusted lieutenants, Ted Weschler and Todd Combs.
Here’s the key point. As of Buffett’s latest letter to shareholders, Weschler and Combs each manage more than $12 billion of Berkshire’s stock portfolio. And they do it independently. In other words, they can each make the stock moves they want without needing Buffett’s permission – or even letting him know about it. In fact, Buffett says that he often doesn’t find out about moves the two men made until he reads a monthly portfolio summary.
So, the Apple shares that were sold this month were part of either Weschler’s or Combs’ portion of the portfolio – not part of the Apple stake Warren Buffett built in his part of Berkshire’s stock portfolio.
Buffett bought Apple for the long haul
Warren Buffett has said many times that he bought Apple as a long-term investment. Buffett loves the company’s fiercely loyal customer base and the ecosystem of products offered by Apple, which offer tremendous value to the consumer. As Buffett told CNBC in regards to his Apple investment, “we buy them to hold.”
The bottom line is that Buffett isn’t souring on Apple. In fact, there’s every reason to think that the Oracle of Omaha loves the tech giant as much as ever.