Warren Buffett Stock: Coke Parallel Could Be a Clue About Apple
A striking detail in Berkshire Hathaway’s stock portfolio has caught Wall Street’s attention as investors look for clues about what CEO Warren Buffett might do next.
“Berkshire owns exactly 400,000,000 shares Apple and 400,000,000 shares Coca Cola as of June 30, 2024,” said David Kass, professor of finance at the University of Maryland’s Robert H. Smith School of Business, tweeted on Wednesday“If Buffett likes round numbers, he probably wouldn’t be planning to sell more Apple shares.”
In an email to LuckKass acknowledged that the numbers could just be a coincidence, but said he believes Buffett is signaling that he is done selling and “plans to hold Apple shares indefinitely,” similar to his Coca-Cola shares.
“Given that Buffett has said the CEO is the chief risk manager, I believe Buffett acted prudently in reducing the Apple portfolio weight from 50% to 30%,” he added, noting that Berkshire’s initial investment in Apple of about $30 billion has grown to about $180 billion.
Buffett followers—and investors in general—have been left puzzled about his possible intentions after the conglomerate revealed a cut nearly 50% of shares in Apple earlier this month. While analysts don’t think he will sell all of his remaining Apple shares, the sharp cut in the second quarter has raised questions about further cuts.
Of course, while Berkshire currently holds the same number of shares of Apple and Coca-Cola, the value of those holdings is very different. As of Friday’s closing price, Apple’s stake was worth $90.4 billion, while Coke’s was worth $27.7 billion.
Apple accounts for nearly 50% of Berkshire’s equity investments, while Coca-Cola accounts for 9%, according to Kass.
But since Coca-Cola is Buffett’s oldest and longest-running stock, remaining steady for decades, the symmetry in his Apple holdings is too compelling to ignore, since CNBC and The Wall Street Journal also mentioned in Kass’ tweet last week.
Additionally, Buffett is reportedly an avid fan of Coca-Cola. drink five cans of Coca-Cola a daywhile he is also an iPhone user and has praised Apple for its customer loyalty.
A representative for Berkshire Hathaway did not immediately respond to a request for comment.
Analysts see Apple’s stock sale as a risk management actionnoted that it has grown to account for a large portion of the portfolio by valuation. In fact, it followed previous moves to trim the portfolio. In May, Berkshire discloses sale of 100 million Apple sharesaccounting for 13% of shares at that time.
CFRA Research analyst Cathy Seifert said Luck last week that Apple’s latest stock sale represents a “Classic Portfolio Rebalancing“ .
With Berkshire’s portfolio tilted so heavily toward a handful of stocks like Apple, there’s a risk of overconcentration, she explained. Some profit-taking could also occur, as the selling comes as the broader stock market is falling. record high after record high.
The stock sell-off helped boost Berkshire’s cash pile to a new high of $277 billion at the end of the second quarter, and Kass pointed out X that it nearly equal to the $285 billion investment in stocks overall.
But despite his latest moves, Buffett is still considered a buy-and-hold investor and has not changed much compared to his peers.
“Over the past decade, Berkshire’s average portfolio turnover has been quite low, typically hovering between 5% and 10% per year,” Kass tweeted“The average turnover rate of large-cap managed equity funds over the past 10 years has typically ranged from 30% to 60% per year.”
