Berkshire Hathaway’s Class B shares have rebounded 7.2% since their August 4 closing low of $459.11, recouping part of a nearly 15% drop that followed Buffett’s surprise announcement in early May that he would step down as CEO at the end of the year. The stock is now up 8.6% year to date, while Class A shares have gained 8.5%.
The broader market, however, has pulled further ahead. The S&P 500 has risen 15.5% this year, climbing 7.3% since August 4 to close at a fresh record high on Friday, helped by a lower-than-expected September inflation reading. That performance gap of 6.9 percentage points is now the widest Berkshire has trailed the benchmark index all year.
Apple sale costs Berkshire billions
Apple, which accounts for 6.35% of the S&P 500, also ended Friday at a record high of $262.82 a share, more than 50% above the price when Berkshire began trimming its holdings in late 2023.Since then, Berkshire has reduced its Apple stake by 69%, to 280 million shares as of June 30, down from nearly 916 million as of September 30, 2023. The iPhone maker remains Berkshire’s largest equity position, though further changes could be disclosed when the company reports its third-quarter holdings in mid-November.
Had Berkshire held its full Apple stake, it would be worth roughly $241 billion today, compared with about $74 billion now—a $167 billion difference. Barron’s estimates that Berkshire’s average selling price was around $185 per share, yielding a pretax gain of about $96 billion but leaving roughly $50 billion “on the table.” Those realized gains were further reduced by approximately $20 billion in taxes.
Buffett’s explanation
Buffett has said little about the Apple sell-down beyond comments made at Berkshire’s annual meeting last year. At the time, he told shareholders that he expected Apple would “remain Berkshire’s largest equity position well into the future,” calling it an even better business than long-time holdings American Express and Coca-Cola.He added that he anticipated higher U.S. capital gains tax rates in the future and believed investors would prefer paying a lower rate on what he described as a small Apple sale rather than a higher one later. At that point, Berkshire had trimmed its stake by only about 14%.
Jazwares expands partnerships
Separately, Berkshire’s toy and collectibles subsidiary Jazwares announced two new partnerships this week. The maker of the hit “Squishmallows” line said it will be the official worldwide plush licensee for next year’s FIFA World Cup, with products including the highly anticipated official mascot set to launch in June.
Jazwares is also teaming up with Warner Bros. Discovery Global Consumer Products to launch a wide array of plush items across the studio’s entertainment catalog. The first releases include a “spooky” collection featuring characters from Tim Burton’s Corpse Bride, Gremlins, and IT: Welcome to Derry, with more collaborations expected to follow.
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