In good times, the “Warren Buffett effect” has caused Apple shares to soar — by showing everyone that the world’s most famous investor believes in Apple. However, the opposite is also true: An apparent second thought on the part of Buffett’s firm Berkshire Hathaway can cause shares to fall.
That’s what happened this week, when Berkshire Hathaway was revealed to have slightly reduced its Apple holdings. Responding to the news, Apple shares fell 0.5 percent in pre-market trading.
Buffett’s firm reduced its Apple holdings at the end of 2018, as revealed in a recent regulatory filing. While AAPL has bounced back from its holiday season dip, this nonetheless caused reverberations among other investors.
Warren Buffett has previously acknowledged that he is skeptical about technology. In the past he has admitted to not really “getting” Apple. In recent times, however, this has changed. Buffett has become one of Apple’s biggest cheerleaders — and has stuck with them to great success. The company is Berkshire Hathaway’s single biggest investment.
The recent sell-off is only a slight dip. The firm’s Apple stake reduced from 252.5 million to 249.6 million shares. That’s a 1 percent reduction — although it was still enough to spook some investors.
In a statement to Reuters, Buffett’s assistant Debbie Bosanek said that it was not Buffett’s decision to sell the shares. “One of the managers other than Warren had a position in Apple and sold part of it in order to make an unrelated purchase. None of the shares under Warren’s direction have ever been sold.”
Right now, Apple is up 8 percent since the start of the year. Still, it’s a reminder of how jumpy the market can be. Particularly when one of the world’s richest people, with a net worth of around $87 billion, is perceived as having doubts.
Source: Business Insider