Warren Buffett’s Berkshire Hathaway takes a $30 billion hit on Apple

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Apple represents 40% of Berkshire Hathaway’s stock portfolio.

Johannes Eisele/AFP via Getty Images

Warren Buffett likes

Apple
,

but Berkshire Hathaway’s large stake in the iPhone maker hurts: Apple shares are down about 20% this quarter.

Berkshire Hathaway (ticker: BRK.A, BRK.B) held about 911 million Apple shares as of March 31 and that position has fallen by about $30 billion since then, assuming no changes in participating. This drop represents the bulk of what Barrons estimates are around $45 billion in paper losses this quarter in Berkshire’s massive equity portfolio, which stood at $390 billion on March 31.

Apple shares, which were down 1.4% at $138.86 as of noon Thursday, are down about $175 this quarter. Buffett increased Berkshire’s stake slightly in the first quarter, buying about 3 million shares and likely paying between $150 and $150, based on a comment he made to CNBC.

Berkshire Class A shares were down 1.3% at $453,650; Class B shares were down 1.5% at $302.21. Berkshire’s market value is around $665 billion.

Apple made up 40% of Berkshire’s stock portfolio, and four other stocks made up an additional 30%:

Bank of America

(BAC),

American Express

(AXP),

Chevron

(CLC), and

Coca Cola

(KO).

Buffett, CEO of Berkshire, pokes fun at diversification for sophisticated investors like himself and said Berkshire’s eggs-in-a-basket approach has served him well for more than half a century.

The paper losses — unless reversed by the end of the quarter — would result in the company’s worst financial results since the first three months of 2020 and a decline in book value. Berkshire lost $50 billion in the March 2020 quarter.

Under accounting rules, changes in the value of Berkshire’s stock portfolio affect earnings, a rule that Buffett says regularly skews financial results. The company is expected to earn about $7 billion after tax from its operations in the current period.

Barrons estimates that Berkshire’s current book value is approximately $326,000 per Class A share, including expected earnings for the current quarter, down about 5% from the March 31 figure of about 345 $000. That means Berkshire shares are trading at 1.4 times estimated book value.

Berkshire slowed its share buybacks in the March quarter as its shares rose and easily outpaced the S&P 500. The company repurchased $3.2 billion in shares during the period, versus an average of around $7 billion per quarter in 2021. Even in hindsight, Berkshire is still up 2% this year, compared to a 17% decline in the S&P 500.

Buffett said at Berkshire’s annual meeting a few weeks ago that the company bought no shares in April when Class A shares mostly traded above $500,000. Buffett said Berkshire would be price-conscious in its stock buybacks.

It will be interesting to see if Berkshire has resumed stock buybacks this month. In 2021, Berkshire favored buying its own stock over buying stock in other companies. Buffett flip-flopped in the first quarter, buying a record $51 billion worth of stocks, including Chevron and

western oil

(OXY) and slowing Berkshire share buybacks.

Write to Andrew Bary at [email protected]

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