One of the biggest shockers of the latest Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) quarterly unveiling was how much Apple (NASDAQ:AAPL) stock the firm sold. Indeed, many expected Warren Buffett’s conglomerate to sell some Apple stock after trimming its stake by 13% in the first quarter. However, the reaction in Apple shares seemed to suggest that few investors saw Berkshire shedding nearly half of its stake in such a hurry.
With around 56% of the Apple stake now freshly reduced, fans of Berkshire and Buffett may now be wondering where the firm goes from here. Arguably, the Apple bet was one of Buffett’s best investments of all time.
In any case, Berkshire’s cash reserves keep growing while potential opportunities get slimmer with every upward surge. The latest market sell-off may have changed things slightly. Regardless, here are a few stocks that may make sense to pick up as Buffett’s big Apple sale worries some market participants.
Apple (AAPL)
Apple stock crumbled by close to 5% as investors reacted to the magnitude of Berkshire’s latest share sale. Undoubtedly, the move seemed mostly like a massive overreaction. Just because Buffett thinks it’s a good idea to raise cash on one of his firm’s biggest winners doesn’t mean AAPL stock is poised for weak performance.
Of course, only time will tell if Buffett was right to sell in the first half of 2024. If Apple Intelligence exceeds the expectations of the many bullish analysts on Wall Street, the timing of recent sales may look ill-timed. In many ways, Apple Intelligence stands out as one of those technologies that can evolve the smartphone business.
Winning the AI race isn’t just about spending money hand over fist on GPUs or achieving the model with the most parameters. It’s more about maintaining user trust, maximizing efficiencies, and, perhaps most importantly, ensuring high-quality outputs. Apple has a good shot of getting Intelligence right. And if they do, those who sell on the Berkshire sale news may have to buy back at much higher prices.
Skyworks Solutions (SWKS)
Skyworks Solutions (NASDAQ:SWKS) depends greatly on the success of the Apple iPhone. The Apple component supplier has been in a tough spot, even before Berkshire unveiled that it had cut its stake in half.
In any case, Berkshire’s big Apple sale seems to be salt in the wounds of Skyworks more than anything. If Apple doesn’t experience any AI-induced refresh cycle over the medium term, Skyworks may have a tougher time bouncing back after a rough start to the year. The stock is down slightly (around 6%) this year.
The latest quarterly results from Skyworks haven’t been anything to write home about, either. Barclays analyst Tom O’Malley, who has a hold rating on SWKS stock, thought Skyworks had satisfactory numbers that came “slightly ahead” of expectations. Still, the results didn’t convince him to upgrade the name to a buy.
If you believe in the iPhone upgrade cycle, you may consider buying SWKS on the recent weakness.
Berkshire Hathaway (BRK-B, BRK-B)
Finally, we have Berkshire Hathaway, which initially plunged following the big Apple stake cut news, only to rally abruptly in the following sessions. At writing, BRK-B stock is now up 4% since its August lows. Undoubtedly, the Apple share sale news may have caused a bit of jitter for some Berkshire shareholders, at least initially.
Even if Berkshire’s pile of cash is an ominous sign for the markets, investors can seek (relative) safety in Berkshire. Arguably, a market correction is a good thing for long-term holders of Berkshire Hathaway stock.
Though there’s no guarantee that Buffett and company will be net buyers when the market takes a tumble, I’d argue that a plunge increases the chances of a ball being thrown in the legendary conglomerate’s strike zone. Buffett once said that investing is a “no-called strikes game.” Until the market starts throwing better pitches, don’t expect Berkshire to swing its bat.
On the date of publication, Joey Frenette held a long position in AAPL and BRK-B. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a long position in AAPL.