news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Source: Times Finance Author: Comprehensive

On August 3rd local time in the United States, the second quarter financial report released by Berkshire Hathaway, a company owned by Buffett, showed that it had reduced its holdings of Apple shares by more than half, and the book value of its Apple shares had fallen by 51.69%.

Apple, American Express and Coca-Cola have always been Buffett's major holdings, bringing him rich returns. As for the reason for reducing holdings, Buffett believes that if the US government wants to make up for the rising fiscal deficit and increase capital gains tax, then "selling a small amount of Apple" will benefit shareholders in the long run.

Looking back at Buffett's operations in the Chinese market, his investments in PetroChina and BYD also made Buffett a fortune.

Image source: Tuchong Creative

Selling half of Apple shares

Berkshire Hathaway's second quarter report showed that the company's revenue was $93.653 billion, compared with $92.503 billion in the same period last year, and the market expected $91.09 billion; the company's net profit was $30.35 billion, compared with $35.912 billion in the same period last year, and the market expected $17.786 billion. Second quarter operating income rose to $11.6 billion.

In addition, cash reserves were $276.9 billion at the end of the second quarter, a new record high, compared with $189 billion at the end of the first quarter.

According to the financial report, as of June 30, the book value of Berkshire's Apple shares was $84.2 billion, down $51.2 billion from $135.4 billion at the end of March. Since the beginning of this year, it has reduced its holdings of Apple shares by more than half, and the book value of its Apple shares has dropped by 51.69%.

Berkshire Hathaway has continued to increase its holdings of Apple shares since it began buying the company's shares in 2016. According to media reports, Apple has long been the company's largest holding, bringing in more than $100 billion in returns.

In the first quarter of this year, Berkshire Hathaway reduced its holdings of Apple by about 13%, and hinted at the company's annual meeting in May that this was for tax reasons. Buffett pointed out at the time that if the US government wants to make up for the rising fiscal deficit and increase capital gains taxes, then "selling a small amount of Apple" will benefit shareholders in the long run. At the same time, he also believes that holding Apple is not just holding stocks, but treating it as a business, just like holding Coca-Cola and American Express.

In the second quarter, Berkshire Hathaway continued to significantly reduce its holdings in Apple.

In the second quarter of this year, Apple's stock price rose from an opening price of $171.19 on April 1 to a closing price of $210.62 on June 28. Even if the lowest stock price of $164.75 (closing price on April 19) during this period is used as a benchmark, Berkshire Hathaway has realized more than $63 billion in cash (about RMB 450 billion) by selling Apple shares.

Judging from Apple's latest financial report, although the company is no longer growing at a high rate, it remains stable and is a typical blue chip stock with good performance. From the perspective of stock valuation, both the static P/E ratio and the dynamic P/E ratio are over 30 times. From past history, Buffett tends to invest in companies with a P/E ratio of no more than 15 times, from See's Candies, Coca-Cola to Apple. Buffett also emphasizes that companies must have high certainty of growth. He believes that a good investment target should be better than it is now in five years, and this certainty of growth is something Buffett values ​​very much.

As of June 30, 72% of the total fair value of Berkshire's equity investments were concentrated in American Express, Apple, Bank of America, Chevron and Coca-Cola, with shareholding values ​​of US$35.1 billion, US$84.2 billion, US$41.1 billion, US$18.6 billion and US$25.5 billion, respectively.

Buffett's investment in PetroChina and BYD

According to Buffett's 2007 letter to shareholders, between 2002 and 2003, Berkshire spent a total of US$488 million to purchase 1.3% of PetroChina's Hong Kong shares, becoming PetroChina's second largest shareholder.

In 2003, when Buffett bought PetroChina, crude oil prices were high for most of the time due to international political and economic factors. Driven by this, PetroChina's operating performance hit a record high. In the following years, crude oil prices were on an upward trend. As China's largest oil producer, PetroChina also benefited from the rise in oil prices and its market value continued to rise.

By the second half of 2007, driven by the significant rise in oil prices and the proper management of PetroChina's management, PetroChina's market value reached US$275 billion. That year, Buffett sold all of PetroChina's shares at a price of US$4 billion, earning an excess return of about 700%.

In his letter to shareholders that year, Buffett wrote: "Compared with other large oil companies, I think the stock price has reached my expectations." He also specifically mentioned that the huge profits from investing in China Petroleum made the company pay $1.2 billion in taxes to the US Internal Revenue Service. This tax is enough to cover the cost of the US government's operations for about four hours, including national defense, social security, etc.

After making a fortune from China Petroleum, Buffett turned to BYD.

In September 2008, Berkshire Hathaway subscribed for 225 million BYD H shares at HK$8 per share. On August 24, 2022, Berkshire Hathaway reduced its holdings of the stock for the first time, with a shareholding ratio of 19.92% at the time, and the stock price increased 30 times compared with the subscription price.

On the evening of July 22 this year, information disclosed by the Hong Kong Stock Exchange showed that Berkshire Hathaway sold 1.3955 million shares of BYD (002594.SZ, 01211.HK) on July 16. After the sale, it still held 4.94% of H shares, with a total of 54.2 million shares.

On June 11 this year, Berkshire Hathaway reduced its holdings of 1.3475 million BYD H shares. According to media reports at the time, this was the 14th time Buffett publicly disclosed that he reduced his holdings of BYD H shares. Including this time in July, this is the 15th time Buffett has reduced his holdings of BYD.

At the shareholders' meeting in May 2024, Buffett said that BYD and Costco were the two stocks that Munger had most strongly advocated buying during the years he and Munger had worked together. As for the reason for reducing his stake in BYD, Buffett said that he hoped to focus more on the United States. "The investment in BYD is similar to the investment in Japan five years ago. This is a rare large investment outside the United States."

(Times Weekly compiled from Securities Times, Cailianshe, China Business News, Red Star News, etc.)