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The market is always right. He is a supreme judge who does not give discounts to anyone. Not even to the gurus, those who over time have demonstrated that they know how to juggle the ups and downs of prices with great skill. And in this case Mr Market may have given a “financial slap” even to His Majesty Warren Buffett. As of March 31, 2024, his Berkshire Hathaway declared that it had sold 115 million Apple shares in the first quarter of 2024, equal to 13% of the total exposure. A move followed the sale of 10 million shares in the latter part of 2023.
Overall, therefore, Buffett’s conglomerate sold 125 million Apple shares between the end of 2023 and the beginning of 2024. The average sales price is not known, but considering that between September 2023 and March 2024 the Apple stock fluctuated between 165 dollars and 200 dollars it is possible to estimate with some approximation an average selling price of around 180 dollars. Considering that since June 12th the Apple stock has returned to being the top of the class, with a capitalization exceeding 3,300 billion and a value of 217 dollars, we can do some calculations. Multiplying the 37 dollar growth in the price (the difference between the 217 sold yesterday and the 180 hypothetical average sales) by the 125 million securities left on the market we arrive at 4.62 billion dollars.
This is how much the loss of profit accused by Buffett for the choice to reduce his exposure to the Apple before the recent exploit would amount to. One of the most famous maxims attributed to the guru is: “The market is that place where the impatient give money to patients.” In this case, however, it seems that he was the one who did not have the patience to wait for Apple to reveal its strategy on artificial intelligence. Yet it was known that something was cooking. Last January 10, CEO Tim Cook, during the Worldwide developers conference, announced that in the coming months the company would present important news on the topic. As promised, Cook revealed Apple’s strategy in recent days: the new smartphones will integrate ChatGpt and will also give the possibility to choose other forms of AI: from Google’s Gemini to Musk’s Grok.
The strong point is the lack of retroactivity: anyone who wants to be part of the game will have to purchase new models. And the market liked this so much that it made the stock jump by 12% in the last two days. For once Mr Market has therefore gone against the choices of the number one “contrarian investor”: that Buffett who will be wondering if perhaps he should have had more patience. And wait for Cook’s announcement before selling all those shares.
