Warren Buffett Is Selling Apple Stock and Buying These Stocks Instead

Warren Buffett's Surprising Apple Stock Sell-Off I think one of the most interesting moves on the market over the past six months is Warren Buffett selling an absolutely tremendous amount of Apple stock now this has been his biggest holding for quite a while accounted for more than 50% of his portfolio and that's the portfolio that he holds within Berkshire haway but it's just been dumping that stock like crazy and the second quarter was actually a huge selling month so I want to get into exactly what we found out about what he's selling I'm going to tell you why I think he's selling and then there were some Acquisitions that Buffett made as well as well so I want to go through those buys because there were some interesting names in the quarter my name is Travis ham thanks for watching asymmetric investing Please Subscribe here on YouTube for all my content and thanks to this video sponsor the monly fool if you go to fool.com ym they'll give you their top 10 stocks to buy Understanding the 13F Filing and Berkshire's Portfolio right now now this information is coming from a 13f filing that every large investor needs to make to tell investors to tell the market tell other investors what exactly they own that filing is due 45 days after the quarter ends so that came out a couple of weeks ago from Berkshire Hathaway so that's where this data is coming from and you can see these are the Holdings within the Burkshire hathway portfolio in total the portfolio is $280 billion so just an incredible amount but it's actually a very concentrated portfolio this is as of the end of June 2024 400 million shares of Apple stock that's about 30% of the portfolio and then you've actually got some names that Buffett has held for quite a while Bank of America American Express cocacola Chevron accidental petroleum this is actually one that Buffett has been buying quite a bit of recently so seems like a kind of stock that he's really he really likes right now I'll talk about that one in a little bit but I want to focus on Apple first and one of the reasons is Apple is a stock that Buffett has held for quite a while he was actually an acquirer of Apple stock as recently as the first quarter of 2023 so this is his full position the number of shares changes here because Apple did go through a stock split so don't read too much into this jump right here that's why this blue line which is the percentage of Berkshire Hathway's portfolio doesn't change all that much it's been around 40 50% since 2020 but there were a few sales a few Acquisitions in this couple of years and then that position held at 96 million shares of stock until the end of 2023 that is when Buffett decided to start unloading that stock at an absolutely tremendous rate so sold over 100 million shares in the first quarter and then sold nearly 400 million shares in the second quarter of 2024 so why is The Decline in Apple's Financial Performance Buffett selling shares I think this chart really tells a lot of the story for Buffett in blue we have Apple's Revenue so that Revenue has been growing at a pretty steady rate from 2016 and this chart goes back to the September 2 2015 period but that includes when he started acquiring shares then early in 2016 so you can see that Revenue grew through 2022 free cash flow grew through 2022 but look at what has happened over the last year and a half or so Revenue growth has stagnated at Apple free cash flow is starting to fall and if you dig into the numbers the companies iPhone sales have stagnated mac sales have stagnated iPad sales are falling the only segment within Apple that is growing consistently right now is services and you can think of that as the tax that the company has on a lot of its Tech products today services are that 30% fee that you're going to pay to Apple to buy something on an iOS device it's the $20 billion or so that Google pays to be the default search engine on iOS devices it's iCloud fees it's all those things that we don't necessarily want to be paying for but Apple keeps charging for more and more of their products over time so is that a core way to grow your business well it can be but it's a way to squeeze more out of each of your incremental users it's not growing the user base and it's not growing your core products iPhones iPads Macs airpods those would be much healthier ways to grow the business than just trying to squeeze more Revenue out of each user from a service perspective so that I think is something that Buffett is looking at but the other thing to look at is this purple line that is the price to earnings multiple when Buffett was buying shares of Apple shares were trading at 10 11 12 times earnings he may have even bought shares when they were trading for 15 times earnings but today Shares are trading for 34 times earnings so when you think about the ways that you can have upside in a stock you can grow your Revenue you can increase your margins and you can have multiples expand Apple has had all three of those things happen over the last eight years and has happened while Buffett has owned the stock but now those Tailwinds are behind Apple Revenue growth is slowing those margin expansions and Serv Revenue may have limits on how far they can go and we're more likely to see multiple compression in the future than than we are multiple expansion especially when you consider those first two things that this is not a Growth Company anymore so I think that's exactly what Buffett is seeing in Apple stock today thanks to our friends at the monly fool for sponsoring this video visit fool.com ym for the top 10 stocks to buy right now so what is Buffett's New Acquisitions and Portfolio Changes Buffett buying well he's not buying a lot right now he's holding a lot of cash on the balance sheet but there are a few stocks that he's buying and this is the list of everything that he sold the other one that I just wanted to note before I move on Paramount Global sold out of that completely I have talked about that here on this channel I think that was kind of a strange acquisition for Buffett because it didn't fit any of the things that he likes in businesses strong balance sheets strong free cash flow the Paramount's business was really moving in the opposite direction also got out of snowflake but if we look at the Acquisitions here a couple of interesting ones Sirius XM Ulta Beauty heo was a new buy if you're not familiar with heo they are a company that makes parts for a lot of industrial applications in particular the Aerospace industry is where one area that they have done really well these are really really small positions in the portfolio so maybe starter positions if you will also Liberty Media is another company that has been in the portfolio for a while again not a huge position but you're still talking about over a billion dollars worth of value over two billion actually if you add these two together the two other Acquisitions that I wanted to note chub limited and then ocidental petroleum oxidal petroleum is one that Buffett has been adding for a while let's look at the chart this is Buffet Stak in ocidental petroleum he's just been adding to this quarter after quarter started really being a big position in early 2022 but that has just expanded now about 6% of the portfolio so oil and gas is actually a pretty big piece of Buffett's portfolio and ocidental petroleum is taking a big Buffett's Investment Strategy and Future Moves centerpiece but I think the big takeaway is that he's not actually buying a lot at all he has two $71.52 there's also a little bit of investments in fixed maturity Securities Equity Securities this is the equity portfolio we just talked about $285 billion there but that's down sharply in large part because he's been selling shares of Apple that mostly goes into cash and he's just collecting five six% on that cash through treasury bonds so clearly if you're somebody who follows Warren Buffett what he does he is somebody who thinks long-term about investing he wants to hold stocks for very long periods of time doesn't always do that but oftentimes holds them for years sometimes even decades but apple is one that he's not holding on to for decades he is he could potentially unload that entire position by the end of 2024 and I think the big reason for that is Apple stock is very expensive but the growth of the business is slowing that free cash flow machine may be slowing down a little bit so there may not be a lot of catalysts behind the business going forward and while he's buying a couple of stocks right now what he's doing with a lot of that cash is just investing it in really safe Bonds in treasuries he's investing it in treasuries and he's just hanging on to that cash for a rainy day maybe some sort of acquisition in the future if the market pulls back a little bit more so I think interesting moves from Buffett but let me know what you think about the sale of Apple selling well over half of a stake leave those comments in the comment section below don't forget to subscribe to asymmetric investing thanks for watching everybody see you here next time