3 Things You Can Learn From Warren Buffett’s Latest Investment Moves
Written by
John Csiszar
Edited by
Rebekah Evans
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Warren Buffett is one of the most famous and popular investors of all time. His investment vehicle, publicly traded Berkshire Hathaway, has doubled the return of the S&P 500 since 1965, according to a letter released by the company — an extraordinary record that has garnered Buffett the nickname the “Oracle of Omaha.”
Tens of thousands of people from around the globe attend the Berkshire annual meeting just to glean some investment insight from Buffett, and when he speaks, the world listens. But as the saying goes, “actions speak louder than words” and when Buffett makes changes in his investment position, investors stand up and take notice. Here’s a look at some of Buffett’s latest moves in the Berkshire portfolio and what you as an individual investor can learn from them.
Trimming His Apple Stake
After cutting his stake in tech giant Apple by 13% in Q1 2024, as reported by CNBC News, Buffett sold even more in Q2 2024, trimming his position in half. This caught some industry players by surprise, because Apple has in recent years become Buffett’s favorite company.
In fact, at Berkshire’s 2023 annual meeting, Buffett said, “Apple has a position with consumers that they’re paying $1,500 or whatever it may be for a phone and these same people pay $35,000 for a second car. And if they had to give up their second car or give up their iPhone, they’d give up their second car!” Thus, it was a bit concerning to some investors when he aggressively sold off half of his biggest position in 2024.
Selling Half of His Bank of America Position
On top of his big Apple sales, Buffett has been unloading Bank of America, which has been one of his largest positions for a long time. Since July, Berkshire has unloaded over 116 million shares of Bank of America, according to AP News. Combined with the Apple sales and existing cash, this pushed Berkshire’s cash hoard to a record $276.9 billion, as reported by CNBC News.
On the surface, this makes it appear that Buffett has soured on Bank of America and this may indeed be the case. However, Buffett is taking huge gains on its Bank of America position and it still remains the third-largest holding in Berkshire’s portfolio, with a value of over $34 billion.
Perhaps the Most Telling: Halting Berkshire Hathaway Buybacks
As anyone who follows Berkshire Hathaway knows, Buffett is a big fan of buying back his own company’s stock. He finds this to be an easy way to provide better returns for his shareholders, as fewer shares outstanding means each individual share becomes worth more. But Buffett is also a well-known value shopper and he will only buy back Berkshire stock when he views it as trading below its intrinsic value.
This is why his actions in June 2024 were alarming to some observers. In that month, for the first time since May 2022, Buffett didn’t buy back a single share of Berkshire Hathaway.
In his 2023 shareholder letter, Buffett said, “All stock repurchases should be price-dependent. What is sensible at a discount to business-value becomes stupid if done at a premium.” If he’s taking a break from buying shares of Berkshire, it could mean that he no longer sees it as a value — and he may no longer see the U.S. stock market as a value either.
So, What Does It All Mean?
Although Buffett is one of the world’s most successful investors, this doesn’t necessarily mean that as an individual you should mirror his moves. Even if Buffett is selling some stocks, it may not even mean that he is down on their prospects. Portfolio managers, Buffett included, make moves for numerous reasons.
For example, it’s entirely possible that Buffett needs to raise cash for a new acquisition. Or, he could be selling to take profits while he thinks taxes are still low. He could just be afraid of being too concentrated in those positions. Or, it could indeed be the case that Buffett is actually souring on his positions in Apple, Bank of America or even the market in general. But it’s worth noting that even after the big sales, Apple and Bank of America represent the first and third largest positions in the Berkshire Hathaway portfolio, according to CNBC News.
Whatever the reason for Berkshire’s recent sales — and temporary suspension of its stock repurchases — it’s usually not a good strategy to mirror a portfolio manager’s moves, even if that portfolio manager is Buffett.
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