Berkshire Hathaway Slashes Apple Stake, Sets Record $325B Cash Reserve Amid Tax Hike Concerns

Warren Buffett's Berkshire Hathaway has ramped up its cash reserves to a record-breaking $325.2 billion after selling off a significant portion of its Apple holdings. Amid expectations of higher capital-gains taxes, the company reduced its Apple stake by two-thirds, marking a strategic pivot to cash.

Berkshire Cuts Apple Stake by Two-Thirds, Pushing Cash Reserves to Record $277 Billion

Berkshire Hathaway's cash reserves have reached an all-time high of $325.2 billion as Warren Buffett swiftly exits one of his most lucrative trades in the last ten years.

Late last year, the Oracle of Omaha and its conglomerate holding firm Berkshire began selling Apple stock, reducing their significant stake in the digital startup founded in 2016.

According to the Financial Times, Berkshire increased the pace of its sales early this year and cut its ownership of Apple in half by the end of the second quarter, contributing to the company's cash reserve reaching an all-time high of $277 billion.

However, by selling another quarter of its tech business shares, or 100 million shares, Berkshire Hathaway broke its previous cash record by the end of the third quarter, lowering its total number of shares from 400 million to 300 million.

The business sold over two-thirds of its Apple stock in less than a year. Apple accounted for $178 billion of Berkshire Hathaway's portfolio at its height, even though the tech giant remains in its most prominent position with $69.9 billion in shares.

Over the past two years, Buffett has reduced his shareholdings across the board, which coincides with the Apple selling frenzy. According to CNN, Berkshire was a net seller of stocks for the eighth straight quarter in the third quarter, having purchased only $1.5 billion worth of stocks.

Buffett Boosts Cash Reserves to $325B as Berkshire Prepares for Potential Tax Hikes

According to its most recent earnings report, Berkshire's cash and short-term treasuries total $325.2 billion, surpassing the market value of its stocks, valued at $271.6 billion at the end of the third quarter. Although some have questioned Berkshire's large stock sales, the business has done well over the past three years, with its shares increasing 52%, beating the S&P 500's 22% growth.

Buffett's forecast that the capital-gains tax rate would rise during the coming years, potentially to aid in reducing the federal deficit, which as of 2023 was approximately 122% of the nation's GDP, is one factor contributing to the enormous equity sell.

“I would say with present fiscal policies I think that something has to give and I think that higher taxes are quite likely,” Buffett said during Berkshire’s annual shareholder meeting in May.

Kamala Harris, the vice president, has stated that she will increase the corporation tax rate from 21% to 28% if elected president. In the meantime, former President Donald Trump has promised to lower business taxes for American-made goods to 15%.

Buffett stated that Apple would remain Berkshire Hathaway's most significant investment, but he also wished to have more cash.

“But I don’t mind at all, under current conditions, building the cash position,” Buffett said in May. “I think when I look at the alternative of what’s available in the equity markets and I look at the composition of what’s going on in the world, we find it quite attractive.”

Despite his statement at the May meeting, Buffett is ultimately unconcerned that the capital-gains tax rate investors pay when they sell assets like stocks are expected to increase.

“We always hope at Berkshire to pay substantial federal income taxes, we think it's appropriate,” he said.