Zinger Key Points
- Berkshire's Apple holding at end of stood at $$135.4 billion, down over 22% from the $174.3 billion worth of shares at end of Q4.
- Buffett and Berkshire received a queer call from a social-media user to cash out of the company and deploy the proceeds in Tesla.
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Warren Buffett‘s Berkshire Hathaway, Inc. BRK BRK announced its first-quarter results on Saturday, with the investment guru hosting the annual shareholder event in Omaha, Nebraska. A regulatory filing also showed a second straight quarter of trimming its Apple stake. Tesla, Inc. TSLA CEO Elon Musk saw this as a potential opportunity for Berkshire to invest in the electric vehicle maker.
What Happened: A Tesla fan following the weekend shareholder meeting offered some advice to Buffett on social media: “C’mon Warren Buffett, sell all your $AAPL and buy $TSLA.”
Berkshire’s Apple Holding: At the end of the first quarter, Berkshire’s Apple holding stood at $135.4 billion, down over 22% from the previous quarter. The exact number of shares will be known only when the firm files its 13F report.
Based on Apple’s average first-quarter stock price of $181.83, Berkshire may have held 744.65 million shares at quarter-end, lower than the 904.87 million shares at the end of the fourth quarter.
Buffett shrugged off the Apple reduction as a one-time move and reiterated that the iPhone maker would remain Berkshire’s top holding unless it dramatically changes its capital allocation strategy.
He suggested the move aimed to bolster Berkshire’s cash position and pay tax bills.
See Also: How To Invest In Startups
Musk’s Invitation: Despite Buffett’s stance, Musk continues to harbor hopes for Berkshire’s investment. Replying to the social media post, the Tesla CEO said, “He should take a position in Tesla. It’s an obvious move.”
This is not the first time Musk has expressed interest in Berkshire’s involvement. In February 2023, when informed about Berkshire’s significant cash reserves, Musk hinted at a potential investment in a company starting with “T.”
Additionally, Musk has mentioned an unsuccessful meeting with Charlie Munger, Berkshire’s former Vice Chairman, in 2009.
At the May 2023 shareholder meeting, both Buffett and Munger acknowledged Musk’s achievements. Buffett called him “a brilliant, brilliant guy… He dreams about things and his dream has got a foundation,” while Munger referred to him as “brilliant.”
Investment Philosophy Clash? The rationale behind Berkshire’s lack of interest in Tesla likely stems from its value investing philosophy. Future Fund‘s Gary Black, a Tesla investor, has explained why Berkshire might never invest in the EV stock: “Growth investors start with high growers and then buy those that are reasonably priced relative to intrinsic value. It’s two entirely different mindsets.”
Tesla’s high forward price-to-earnings ratio (72.46) and lack of dividend policy make it a less attractive option for value investors like Berkshire.
On Saturday, when asked about zero-emission vehicle companies as an investment option, Buffett said he didn't believe Berkshire brought any special expertise to that field. He noted that vehicle manufacturers were better suited for such endeavors.
Meanwhile, Tesla faces headwinds with a slowdown in sales. The company is banking on its full self-driving technology to compensate for the weakness in its core auto business.
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