Warning: Warren Buffett Keeps Selling His Favorite Stock for a Surprising Reason
Warren Buffett is a big believer in long-term investing. In fact, many of his largest positions have been in his portfolio for decades. And while he and his lieutenants regularly adjust the publicly traded portfolio at Berkshire Hathaway, there’s a lot less turnover than most professionally managed funds. So when Buffett and company start to heavily sell one of Berkshire’s biggest investments of all time, every investor should pay attention.
In early 2016, Buffett and his investing team began accumulating shares of Apple (NASDAQ: AAPL). Soon, Apple became the largest public holding in Berkshire’s history, with a stake worth roughly $100 billion.
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What do Buffett and Berkshire like so much about Apple? Earlier this year, Buffett compared Apple to two other fixtures in Berkshire’s portfolio: Coca-Cola and American Express:
I can’t really think of a company like American Express that has a position and a credit card that is extremely strong. It has strengthened dramatically over the last 20 years for a lot of reasons. That’s the story of why we own American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business. And we own Apple, which is an even better business, and we will own, unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola.
It’s quite amazing that Buffett not only compared Apple to Coca-Cola and American Express — blue chip stocks that have been in his portfolio for decades — but he also declared that Apple’s business model was even better than those iconic businesses.
When discussing American Express, he highlighted the company’s immense brand value. American Express cardholders often remain loyal to the company for huge portions of their life, and spend disproportionately more than other card providers like Visa and Mastercard. Buffett’s comments about Apple show the same enthusiasm for its brand power.
“If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it,” Buffett told CNBC last year.
But if Buffett likes Apple so much, declaring that it will remain in Berkshire’s portfolio “unless something really extraordinary happens,” why has Berkshire been consistently trimming its Apple stake? Last quarter alone it nearly cut its Apple position in half.
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