AAPL stock fell 10% after Warren Buffett sell-off, but investors shouldn’t panic

AAPL stock fell 10% at market opening this morning, to less than $200. It followed weekend filings by Warren Buffett’s Berkshire Hathaway, disclosing that the conglomerate had reduced its holding by half.

The reason for the sell-off isn’t clear, but commentators are urging calm, and suggesting that it doesn’t signal a loss of faith in the company’s future prospects …

Berkshire Hathaway sold half its AAPL stock

Filings published over the weekend revealed that Berkshire Hathaway sold almost half its AAPL shares during Q2.

Before this most recent sell, the firm held around 789 million shares in AAPL. It now holds around 400 million. Its stake in Apple is now around 2.6% of the whole company, being worth $84.2 billion currently, down from $135.4 billion last quarter. 

A number of investors clearly chose to follow his lead, reducing their holdings in the stock. AAPL started falling in after-market trading over the weekend, and that hadn’t changed by the time the market opened this morning.

However, analysts and others were quick to urge calm. Some pointed to the broader economic factors which are leading investors to reduce their stock holdings in general, in favor of safer instruments like bonds. Bloomberg reports:

The latest announcement comes amid broader concern about the potential of an economic downturn ahead. Worse-than-expected jobs data on Friday stoked fears the Federal Reserve may have waited too long to start reducing interest rates, sending the Nasdaq 100 Index into a technical correction […]

Megacap peers including Microsoft Corp., Amazon.com Inc. and Alphabet Inc. have all tumbled from record highs reached in early July. In total, Nasdaq 100 members have shed more than $3 trillion in value over that stretch with both Nvidia Corp. and Tesla Inc. each seeing declines of more than 20%.

On this scale, AAPL is doing well, just 6% down on its all-time high.

Buffett unlikely to have concerns about AAPL

Where an economic downturn is feared, it may make sense to reduce exposure to stocks – which are more volatile – and temporarily hold money as cash, or in safer investments. That’s especially the case, suggested one analyst, where you hold a very large position in a single stock, whether that be Apple or anyone else.

“If you’ve got this outsized position you take some profits and you reduce some of your concentration risk,” said Cathy Seifert, a research analyst at CFRA. “They still have a fairly concentrated portfolio,” she added.

Another agrees, pointing out that if Buffett had concerns about Apple, he would have sold all the stock, not just half of it.

“Buffett’s reduction of his Apple stake is merely about risk management,” said Joe Gilbert, senior portfolio manager at Integrity Asset Management. “If there were any concerns about the longer-term viability of Apple, Buffett would have exited the entire position.”

9to5Mac’s Take

The commentary cited makes sense. Buffett has reduced holdings in other stocks too. If he expects the market as a whole to fall, then converting chunks of your investments to cash makes sense.

Indeed, if the AAPL price does continue to fall, Berkshire may well buy back the stock at a lower price later, to restore its position and save some money into the bargain.

The stock is currently volatile in the opening minutes, climbing quickly back above $200 but bouncing up and down.

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