Berkshire Hathaway, the investment firm led by Warren Buffett, has divested a significant portion of its holdings in Apple. Over the past year, the company has offloaded 67% of its Apple shares, resulting in a reduction of approximately 615.56 million shares in its overall stake in the tech behemoth.
Buffett has been actively selling stocks for eight consecutive quarters, with Berkshire Hathaway having liquidated $166.2 billion worth of shares during this period. While Apple remains the largest asset within Berkshire’s portfolio by market capitalization, there appear to be shifts in the investment approach of the company.
One of the factors behind Buffett’s decision to sell Apple stock is its elevated valuation. Currently, Apple shares are trading at 38 times their earnings for the last year, a figure that marks a historical high and raises concerns about the company’s future growth potential.
Additionally, the growth of Apple’s physical product sales, including iPhones, Macs, and iPads, has stagnated. Nonetheless, Apple continues to see strong performance from its subscription services. Despite its stake reduction in Apple, Berkshire Hathaway has made several targeted investments.
A highlight of the third quarter was a notable $550 million investment made in Domino’s Pizza.
Buffett adapts investment strategies with stock exits
This investment accounts for 1,277,256 shares.
Since its initial public offering in 2004, Domino’s stock has shown remarkable growth, increasing by over 7,000%. The company has initiated a recent strategy named “Hungry for MORE,” focusing on operational enhancements and customer retention. This initiative includes a revamped menu, proprietary technology, a value-centric rewards program, and an effort to amplify its brand through franchise partnerships.
Berkshire’s leader favors businesses that embrace both their triumphs and setbacks. He values the effective marketing strategies that Domino’s has implemented throughout the decades, which has contributed to strong shareholder advantages.
Additionally, Domino’s consistently increases its annual dividend and engages in share buybacks. This approach aligns well with the principles of Berkshire’s investment philosophy. Although Domino’s future price-to-earnings ratio stands at 27, suggesting it isn’t undervalued, its robust performance and tactical initiatives render it a compelling addition to Berkshire’s investment portfolio.
Market observers closely monitor Buffett’s strategic decisions for insights into emerging market trends and potential investment prospects. It will be intriguing to see if Berkshire seeks to expand its investments in Domino’s in the upcoming quarters.
