Finance

Warren Buffett did something curious with his Apple stock holding

Published

10 months ago

August 15, 2024

Business Finance News

Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024.

CNBC

A coincidence or master plan? Warren Buffett now owns the exact same number of shares of Apple as he does Coca-Cola after slashing the tech holding by half.

Many Buffett followers made the curious observation after a regulatory “13-F” filing Wednesday night revealed Berkshire Hathaway‘s equity holdings at the end of the second quarter. It showed an identical 400 million share count in Apple and Coca-Cola, Buffett’s oldest and longest stock position.

It’s prompted some to believe that the ‘Oracle of Omaha’ is done selling down his stake in the iPhone maker.

“If Buffett likes round numbers, he may not be planning to sell any additional shares of Apple,” said David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business. “Just as Coca-Cola is a ‘permanent’ holding for Buffett, so may be Apple.”

The 93-year-old legendary investor first bought 14,172,500 shares of Coca-Cola in 1988 and increased his stake over the next few years to 100 million shares by 1994. So the investor has kept his Coca-Cola stake steady at essentially the same round-number share count for 30 years.

Due to two rounds of 2-for-1 stock splits in 2006 and 2012, Berkshire’s Coca-Cola holding became 400 million shares.

Buffett said he discovered the iconic soft drink when he was only 6 years old. In 1936, Buffett started buying Cokes six at a time for 25 cents each from his family grocery store to sell around the neighborhood for five cents more. Buffett said it was then he realized the “extraordinary consumer attractiveness and commercial possibilities of the product.”

Slashing Apple stake

Investing in tech high-flyers such as Apple appears to defy Buffett’s long-held value investing principles, but the famed investor has treated it as a consumer products company like Coca-Cola rather than a technology investment.

Buffett has touted the loyal customer base of the iPhone, saying people would give up their cars before they give up their smartphones. He even called Apple the second-most important business after Berkshire’s cluster of insurers.

So it was shocking to some when it was revealed that Berkshire dumped more than 49% of its stake in the iPhone maker in the second quarter.

Many suspected that it was part of portfolio management or a bigger overall market view, and not a judgement on the future prospects of Apple. The sale brought down Apple’s weighting in Berkshire’s portfolio to about 30% from almost 50% at the end of last year.

And with it settled at this round number, it appears to be in a spot that Buffett favors for his most cherished and longest-held equities.

Still, some said it could just be a pure coincidence.

“I don’t think Buffett thinks that way,” said Bill Stone, chief investment officer at Glenview Trust Company and a Berkshire shareholder.

But at Berkshire’s annual meeting in May, Buffett did compare the two and reference the holding period for both was unlimited.

“We own Coca-Cola, which is a wonderful business,” Buffett said. “And we own Apple, which is an even better business, and we will own, unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola.”

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”