'Warren Crushed Apple' Says Jim Cramer As Buffett Cuts Stake In Tech Giant By Nearly Half: Here's How Much Dividend Income Berkshire Forgoes

Author: Shanthi Rexaline | August 03, 2024 01:16pm

Berkshire Hathaway‘s (NYSE:BRK) (NYSE:BRK) 10-Q report for the second quarter showed the Warren Buffett-led firm significantly reducing its stake in tech giant Apple, Inc. (NASDAQ:AAPL).

What Happened: Berkshire said the fair value of its Apple holding at the end of the second quarter was $84.2 billion, down about 38% from $135.4 billion at the end of the first quarter. Looking at the reduction from the perspective of number of shares, the math works as follows:

• Berkshire had 789.37 million shares of Apple at the end of the March quarter (according to 13F filing)
• Apple’s average stock price for the June quarter was $186.14 and the stock ended the quarter at $210.62.
• The $84.2 billion worth of stake Berkshire disclosed in the 10-Q for the second quarter suggests Berkshire may have been left with 399.77 million shares (taking the closing price for the quarter).

The math suggests a 49.36% reduction in Apple stake by Berkshire in terms of the number of shares.

Apple, which reported quarterly results Thursday, said its board declared a quarterly cash dividend of 25 cents per share, payable on Aug. 15 to shareholders of record as of Aug. 12. The 390-million shares Berkshire is estimated to have sold would have fetched the Buffett-led firm a dividend income of $97.5 million.

If Berkshire held onto the 789.37 million shares it owned at the end of the March quarter, it could have reaped a dividend windfall of a little over $197 million.

See Also: Everything You Need to Know About Apple Stock

Cramer Explores Motive: Commenting on Berkshire’s action, CNBC Mad Money host Jim Cramer said Buffett’s decision may have been prompted by Apple’s China weakness. “Warren crushed Apple and the story is being viewed as ‘China risk,” he said in a post on X, formerly Twitter.

“Cramer apparently doesn’t subscribe to the idea. “Did anyone bother to read or see how well Apple did in China this q? Probably their relative best. Again, not defending this market or the stories, just offering a non-panicked perspective,” he said.

Apple reported a 6.54% year-over-year drop in Greater China revenues in the June quarter, and sequentially, the drop was a steeper 10%. CEO Tim Cook clarified on the call the weakness was due to macro conditions and domestic competition.

Incidentally, when Berkshire trimmed its Apple position by 13% in the March quarter, Buffett said the move was to raise cash during times of economic uncertainty and to foot its federal tax bill.

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Posted In: AAPL BRK