Bernstein pointed out that Buffett showed obvious sensitivity to the valuation of apple, establishing most of his positions when the PE ratio was below 15 times, selectively increasing when the PE ratio was 20 times or below, reducing when it was above 30 times. Apple's average PE ratio in the last quarter was 30 times.
Recently, Buffett significantly reduced his apple holdings and cash holdings reached a new high, which attracted attention. Musk also expressed his own views and took the opportunity to criticize the Federal Reserve. $AAPL.US$ Buffett recently halved his holdings of Apple, while his cash holdings reached a new high, which has attracted attention. Musk also shared his opinion and took the opportunity to criticize the Federal Reserve.
In response to a post on X this week, Musk said,
He (Buffett) clearly expects some form of correction, or he can't find a better investment than US Treasuries.
The Fed needs to cut interest rates, they are really foolish if they don't.
Although Buffett has praised Apple many times in the past, the current scale of the sale has shocked the market. As we all know, Buffett is known for his value investment philosophy, and valuation may be one of the factors that influence his decision.
At the 2024 shareholders meeting, Buffett said that Apple is "very likely" to remain Berkshire Hathaway's largest holding at the end of 2024, and that it is a better company than American Express or Coca-Cola.
Wall Street investment bank Bernstein pointed out that although Buffett publicly praised Apple, he has always been sensitive to valuation, increasing positions when the P/E ratio is close to 20, and reducing positions when it exceeds 30.
In the history of the tech sector, once Buffett begins to reduce his positions, he usually sells them off quite quickly. Buffett almost completely cleared his position in IBM in four quarters and exited his position in HP completely in three quarters.
For Apple, he has also shown obvious sensitivity to valuation, building up most of his positions when the P/E ratio is below 15, selectively increasing them when it is 20 or below, and reducing them when it is over 30. In the last quarter, Apple's average P/E ratio was 30 times.
As of the end of the second quarter, Buffett still owned 0.395 billion shares of Apple, while the company's average daily trading volume was about 60-70 million shares. Buffett's second largest position is Bank of America, with $41 billion. Therefore, if he reduces his position in Apple to the same size as Bank of America by the end of the year, this will be equivalent to about 2% of the daily trading volume of stocks. In the last quarter, Buffett sold an amount comparable to 8% of Apple's trading volume.
In addition, Bernstein also warns that the market's concerns about Apple go beyond Buffett's 50% reduction in holdings and include the US Department of Justice's ruling on Google's monopoly, as well as the market's general concerns about economic recession and the valuation of technology stocks.
Editor/Somer