Why I don’t believe Warren Buffett sold Apple shares in Q4 2023

A recent filing from Berkshire Hathaway indicates that Warren Buffett made a surprising move in the stock market. But Stephen Wright thinks otherwise.

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Did Warren Buffett sell 10,000,382 shares in Apple (NASDAQ:AAPL) at the end of last year? It’s a nice headline, but I don’t think it’s actually the case.

Berkshire Hathaway reported a reduction in its Apple stake at the end of 2023, but when Buffett sold the stock in 2020, he later admitted it was “probably a mistake“. I think there’s a better explanation.

New England Asset Management

One of Berkshire Hathaway’s subsidiaries is General Reinsurance (Gen Re). And within Gen Re is a company called New England Asset Management (NEAM).

Until last year, Gen Re’s stock investments were reported by NEAM, which files its own quarterly reports. As of May 2023 though, these have been part of the Berkshire update.

As part of that move, around 20,424,207 shares appeared on Berkshire’s filing in May. But these were owned by Gen Re, not (directly) by Berkshire itself.

Importantly, the Gen Re portfolio isn’t run by Buffett. So the moves made in that part of the company might not represent the Oracle of Omaha’s latest thoughts.

Who sold Apple?

My guess is that the 10,000,382 shares that were sold came out of Gen Re’s portfolio – and therefore weren’t sold by Buffett. And this probably isn’t the first time something like this has happened.

Over the last few years, NEAM (which included Gen Re at the time) has reported several moves that would have been surprising for Berkshire. These include:

  • Buying shares in Verizon in Q2 2022 (as Berkshire sold its stake)
  • Selling shares in Apple in Q4 2022 (as Berkshire added to its stake)
  • Buying Alphabet shares in Q4 2022
  • Selling Coca-Cola stock in Q1 2023

That’s not to say these are bad ideas – different tax implications might well be significant. But it’s fair to say not every move made by a Berkshire subsidiary is signed off by Buffett.

I suspect Berkshire’s recent sale of Apple stock is a move like this. I can’t know for certain, but I’d guess the 10,000,382 shares the company sold came from the 20,427,207 it inherited last year.

Should I buy more?

Like Buffett, I own Apple shares in my portfolio. And with the price having fallen back to its December 2021 levels, might there be a further buying opportunity for me here?

There are a few reasons why there might be, the most notable of which is difficulties in China, where revenues fell 13% during the last quarter. This is a risk both from a sales and a manufacturing perspective.

Strong growth in the company’s services division is boosting profitability through higher margins though. And the emergence of India helps reduce Apple’s risk both in production and sales growth.

With the stock at $182, it’s firmly on my list to keep an eye on. A retreat to $160 might well see me adding to my existing investment in the company.

Buffett’s largest stock investment

Apple accounts for around 50% of Berkshire Hathaway’s total stock portfolio. And I think the recent reduction is likely to have been a Gen Re sale, not a Buffett one.

I own both stocks in my portfolio. I’m intending to keep them for many years to come, and keeping an eye out for buying opportunities in either.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Apple and Berkshire Hathaway. The Motley Fool UK has recommended Alphabet and Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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