What signal? Buffett reduces Apple's holdings by nearly half in a single quarter, with cash reserves hitting a record high!

Buffett's Berkshire Hathaway reduced its Apple holdings by nearly half in the second quarter, with its stake now worth about $84 billion, down from about $140 billion at the end of March, and the company net sold $75.5 billion in stocks in the second quarter, bringing its cash reserves to a record $276.94 billion, including cash equivalents. Previously, Berkshire Hathaway had reduced its second-largest holding, Bank of America, for twelve consecutive days. Berkshire Hathaway's second-quarter net profit was $30.3 billion, with operating profit excluding some investment income increasing to $11.6 billion.

These sales occurred during a period of crazy gains in the U.S. stock market, with Apple's stock rising 23% and driving the S&P 500 to continuously hit record highs. Just a few days ago, Apple released its quarterly earnings report, showing revenue growth and indicating that new artificial intelligence features will drive iPhone sales growth in the coming quarters. Apple's stock price remained stable after the earnings report, despite overall market sell-offs. Since Buffett first disclosed his Apple holdings in 2016, Apple's stock price has soared nearly 900%, as the company has solidified its control over the industry, bringing Berkshire Hathaway billions of dollars in unrealized profits. Even after the reduction, Apple remains Berkshire Hathaway's largest single holding.

Selling stocks and hoarding cash indicate that Buffett is facing challenges in finding good investments with low enough prices and potential for stable returns. The U.S. stock market has become more expensive: the S&P 500 index's recent price-to-earnings ratio is close to 21 times, higher than the 20-year average of nearly 16 times. In May, Buffett expressed his views on "using cash" at the annual meeting, "We are happy to spend money, but the premise is that we think what we are doing is low risk and can make us a lot of money, otherwise we will not spend money."

Musk commented on Buffett increasing his cash reserves to $277 billion in the second quarter, saying that Buffett apparently expects some form of market correction, or simply believes there is no better investment than U.S. Treasury bonds. The Fed needs to cut interest rates, not doing so is foolish.

For some, Berkshire Hathaway's reduction of Apple may be interpreted as a lack of confidence in the growth story of this iPhone maker. However, many Wall Street professionals urge investors not to pay attention to these news and to remain calm.

"Buffett's reduction of Apple shares is just for risk management," said Joe Gilbert, Senior Portfolio Manager at Integrity Asset Management. "If there were any concerns about Apple's long-term viability, Buffett would exit the entire position. Similar to the reduction of other stock positions held by Berkshire Hathaway, Buffett has substantial unrealized gains." Zacks Investment Management's client portfolio manager Brian Mulberry said that Berkshire Hathaway may, like an increasing number of investors, want to see more evidence that Apple's artificial intelligence investments will bring revenue growth, but it does not believe this will happen quickly enough. Despite the valuation premium, Mulberry believes that holding Apple stock is still meaningful for investors. He said, "It remains in a healthy balance sheet position, and their earnings growth rate will still be faster than the overall market."

Others, including Wedbush analyst Dan Ives, point to Apple's brand loyalty and future growth. He believes Apple is about to enter a major upgrade cycle that will drive revenue growth in 2025 and 2026. He said that Apple just delivered a strong quarterly earnings report and there is a huge artificial intelligence-driven super cycle ahead, "We don't think it's time to hit the exit button now."

Some portfolio managers are considering whether to follow suit. Gabelli Funds portfolio manager Mike Seeks holds shares of Bank of America in an ETF, and he said that Buffett's company selling Bank of America shares made him hesitate. "He is one of the most important investors in the world, and his investment history in the financial services sector is incredible," Seeks said. "Events like this are important, worth paying attention to, and checking our research." In 2011, after the financial crisis, Berkshire Hathaway invested in Bank of America, showing trust in the bank's health when investors questioned it, and became the bank's largest shareholder in 2017 after reducing its holdings last Thursday. Buffett once said, "Operating profit is a better measure of a company's performance."

Dong Bin, Chairman of Oriental Harbor, posted on Weibo: Seeing the news that "Berkshire's Apple holdings have decreased from 789 million shares in the first quarter to about 400 million shares, a decrease of nearly 50%", it is not surprising to reduce holdings a bit, but it is still a bit surprising to reduce so much. Apple accounts for about 10% of Oriental Harbor's holdings in our portfolio. Even though we see Buffett reducing his holdings, we have no intention of following suit because in the era of artificial intelligence, Apple is also one of the most beneficial companies. After Apple 16 and Apple 17, with the advent of artificial intelligence smartphones, there is still a high probability of new growth levels and growth space.

Duan Yongping (online alias: The Road is Invisible, I Have Style) replied to a netizen's question about "whether he has already reduced his Apple holdings" by saying, "I have no plan to reduce holdings unless I am called away. Mainly because I don't know what else I can buy after selling now. And I think in the long run, I can accept the returns Apple can bring me in the future. Buffett is different, he is a professional investor, and he has more choices."

Of course, Apple is not the only stock Buffett has recently reduced — since mid-July, he has been selling Bank of America shares, reducing his holdings by 8.8%. Some believe this is a sign that Buffett does not see any individual problems with these two companies, but is betting on a weakening of American consumers and the broader economy Last Friday's employment data, which fell short of expectations, raised concerns that the Federal Reserve may have waited too long to start cutting interest rates, leading to a technical correction in the Nasdaq 100 index, with the Chicago Board Options Exchange Volatility Index approaching 25.

Large-cap peers, including Microsoft, Amazon, and Google's parent company, have all fallen from their historic highs set in early July. Members of the Nasdaq 100 index have collectively lost over $3 trillion in value during this period, including Nvidia and Tesla, both dropping by over 20%. Meanwhile, Apple's stock price has fallen by about 6% from its all-time high