What You Can Learn from Warren Buffett’s Apple Sale

Sep 11, 2024

Earlier this year, Warren Buffett’s Berkshire Hathaway sold nearly half its stake in Apple. This reduced its share of the portfolio from 50% to 30%: 

The Important Point: Buffett has called Apple “probably the best business I know in the world.” Despite this, he took gains off the table, offering lessons for individual investors:

1. Portfolio Rebalancing: Buffett’s move reduced Apple’s outsized impact on Berkshire’s value. When one stock dominates your portfolio (20%, 30%, or 50%+), it’s worth asking: How much is too much?

2. Taxes: Buffett noted Berkshire is paying a 21% federal tax on its Apple gains, down from higher historical rates. He thinks higher taxes could return, something individual investors should factor in to their own decisions.

3. Valuation: Apple’s growth has made it expensive across metrics like price-to-earnings and price-to-sales. Buffett’s sale does not mean a lack of confidence in the company, the stock is simply not a discount anymore.

The Bottom Line: Despite a sizable sale, Buffett praised Apple at Berkshire’s 2024 meeting and plans to keep it as Berkshire’s largest position. His decision highlights the importance of strategic portfolio management—not a loss of faith in Apple’s long-term prospects.

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