Buffett's Berkshire Lags the S&P 500 This Year as Heavy Apple Stock Sell-Off Costs $50 Billion in Lost Profits
Warren Buffett’s Berkshire Hathaway currently holds about 280 million shares of Apple (Nasdaq:AAPL), valued at approximately $74 billion (£55.5 billion). This makes Apple Berkshire’s largest portfolio holding. However, under Buffett’s leadership, the firm has sold more than 630 million Apple shares over the past two years.
The aggressive selling began in Q4 2023, with Berkshire reducing its stake significantly. Despite this, Apple’s stock has surged by over 50% since late 2023.
Market Performance and Underperformance
Since early August, Berkshire Hathaway’s class B shares have risen by over 7.2% from their near-term low on 4 August. However, the shares were already down 15% after Buffett announced in early May that he plans to retire by the end of the year.
For the year-to-date (YTD), Berkshire Hathaway’s class B shares have gained 8.5%, with class A shares up 8.4%. In contrast, the S&P 500 index has increased by 15.4% YTD. The index has also risen by 7.3% since early August, reaching an all-time high last week after US September inflation data showed a lower-than-expected increase in consumer prices.
The performance gap widened, with Berkshire’s underperformance against the S&P 500 reaching 6.9 percentage points — the largest in 2025. Notably, Apple makes up around 6.35% of the S&P 500 and closed at a record high last Friday.
The Impact of Selling Apple Stock
Buffett has reduced his Apple stake by nearly 70% since late 2023. Had Berkshire not sold its shares, the stock’s value would be approximately $241 billion (£180.5 billion) today, compared to the current $74 billion (£55.5 billion). This results in a massive unrealised gain of around $167 billion (£125.3 billion).
Data indicates Berkshire’s average selling price for Apple shares was about $185 (£138.91) per share, generating pre-tax profits of roughly $96 billion (£72 billion). However, with taxes factored in, the realised profits are estimated at around $20 billion (£15 billion), leaving an opportunity cost of approximately $50 billion (£37.5 billion) in potential profits.
Buffett’s Rationale for Selling
Buffett has offered limited details about his decision to sell such a substantial portion of Berkshire’s Apple holdings. During Berkshire’s 2024 annual meeting, he mentioned that he expects Apple to remain Berkshire’s largest equity position in the future, describing it as a better business than long-term holdings like American Express and Coca-Cola.
He also indicated that US capital gains tax rates are expected to rise, and that the timing of the sales might be motivated by a desire to pay lower taxes now rather than potentially higher rates in the future. Buffett implied that he sees the current tax environment as a factor influencing his decision to trim the stake.
Analyst Outlook and Stock Valuation
According to analysts surveyed by TipRanks, Apple stock currently holds a ‘moderate buy’ rating, with an average 12-month price target of $260.40 (£195.52) per share. The highest target among analysts is $315 (£236.52), with the stock closing at $262.82 on Friday.
Buffett’s Views On Gold
Buffett has long expressed skepticism about gold as a long-term investment. In his 2011 Berkshire Hathaway shareholder letter, he described gold as ‘neither of much use nor procreative,’ emphasising that it doesn’t generate cash flow or create value over time.
In a 2011 interview, Buffett stated that ‘gold is a way of going along on fear,’ noting that gold prices are driven by market sentiment. Demand tends to rise when investors are fearful, and decline when markets are bullish. Buffett’s preference remains assets that generate cash flow and compound wealth over the long term.
Disclaimer:
Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments carry risks, and past performance does not guarantee future returns.