Berkshire Hathaway drastically reduced its holdings, causing Apple and its suppliers' stock prices to plummet together
After being heavily reduced by Berkshire Hathaway, the stock prices of Apple and its suppliers plummeted. Hon Hai Precision Industry Co., Ltd., Taiwan Semiconductor Manufacturing Company, Murata Manufacturing Co., Ltd., and LG Innotek all saw declines in their stock prices. Berkshire Hathaway net sold a large amount of stocks in the second quarter, significantly increasing its cash reserves. Buffett has stated that selling Apple stocks benefits Berkshire Hathaway's shareholders. The scale of the sell-off indicates that it may not just be for tax savings
According to the Vantage Smart Finance APP, after Warren Buffett's Berkshire Hathaway (BRK.A.US) "halved" its stake in Apple (AAPL.US), the stock prices of Apple suppliers plummeted on Monday. Data shows that the stock prices of iPhone assembler Hon Hai Precision Industry Co., Ltd. and chip maker Taiwan Semiconductor Manufacturing Company listed in Taipei both fell by about 10%, while the stock price of Japanese component manufacturer Murata Manufacturing Co., Ltd. listed in Tokyo plummeted by 15%, and the stock price of LG Innotek Co. listed in Seoul, South Korea, dropped by 13%. Apple's own stock price fell nearly 7% in pre-market trading.
Mike O'Rourke, Chief Market Strategist at Jonestrading, mentioned in a report regarding Berkshire Hathaway's sale of Apple shares: "It is hard for anyone to say that this is not a negative factor for the market."
Information disclosed by Berkshire Hathaway on August 4th showed that by the end of the second quarter, the company's holdings of Apple shares had dropped significantly from 789 million shares to about 400 million shares, a decrease of nearly 50%. Behind the large-scale reduction in Apple shares, Berkshire Hathaway net sold $75.5 billion worth of stocks in the second quarter, boosting its cash reserves to a record $276.9 billion, a significant increase from $189 billion in the first quarter. Meanwhile, the company only repurchased $345 million worth of stocks in the second quarter, far below the $2.6 billion repurchased in the first quarter.
It is worth noting that Buffett hinted at the shareholder meeting in May that if the U.S. government raises capital gains taxes to cover the rising fiscal deficit, selling "a bit of Apple" stock this year would be beneficial for Berkshire Hathaway shareholders in the long run. However, analysts point out that the scale of the sell-off now indicates that this may not just be about tax savings.
