After selling 115 million Apple shares on the market in the first quarter, with the sale of another 390 million shares, Berkshire Hathaway – holding company headed by Warren Buffett – has decided to halve its stake in the Cupertino giant, reducing it to $84.2 billion. This strategy is part of a $75.5 billion sales wave that Berkshire Hathaway embarked on in the second quarter and that has sent the Buffett’s cash position at $276.9 billion. The second quarter of this year, moreover, was the seventh consecutive quarter in which Berkshire sold more shares than it bought.
Buffet’s Strategy
On the reasons that led to theOracle of Omaha analysts are wondering. Market valuation or strategy linked to portfolio management in which Apple’s share represented almost 50 percent? The first explanation could be fiscal nature: a defensive move in case, in order to contain the growing deficit, the American government decides to increase the capital gains tax which today provides for afederal tax rate of 21 percent. Behind the massive sale of Apple shares could also be the slowing of growth of the Cupertino giant given its already high valuation on the stock exchange. Apple is, in fact, recording a decline in revenues from iPhone especially in China, an area where big tech is reporting several difficulties. But Buffet’s move could also be dictated by skepticism about the mega-investments inartificial intelligence.
The Artificial Intelligence Knot
For a week now the Big Tech is under pressure on Wall Street due to growing investor skepticism about mega-investments in artificial intelligence and their fruits. Alphabet, Microsoft, Meta and Amazon have spent a total of 106 billion dollars on AI in the first six months of the year. A figure – according to observers – destined to double by the end of the year and reach one trillion within five years. If for the managers of big tech companies artificial intelligence is the new frontier – and therefore it is necessary to accelerate investments to avoid finding themselves in a disadvantageous situation – the investors are not convinced, howeverbecause the fruits of these huge expenses are far from being visible and tangible in terms of results.
The Bank of America Case
Buffet also significantly reduced his position in Bank of Americawhich he invested in in 2011 after the financial crisis, signaling a vote of confidence in the institution as investors questioned its resilience. Specifically, since mid-July, Berkshire has sold more than $3.8 billion of Bank of America shares, its second-largest holding. The sales have reduced Berkshire’s stake in the U.S. bank by one percentage point, to 12.1%. The sale of Bank of America shares, analysts say, signals that Buffett is no longer interested in banks. “Buffett doesn’t seem to think there are compelling opportunities in publicly traded stocks, including his own,” said Jim Shanahan, an analyst at Edward Jones.
What will he do with the liquidity?
At Berkshire’s annual shareholders meeting on May 4, Buffett said his cash management strategy was does not plan to invest cash (The company typically commits to a minimum of $30 billion) “unless we think we’re doing something that has very little risk and can make us a lot of money.” “The question of how it will use the cash and whether it will find investment opportunities in shares or whether it will return it to shareholders through buybacks is a question that remains at the heart of the debate,” Christopher Rossbach, chief investment officer at Berkshire investor J Stern & Co, told the FT.
