Warren Buffett’s Berkshire is lagging the S&P 500 by the largest gap so far this year

(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)

Berkshire Hathaway’s B shares have rebounded 7.2% higher since their near-term closing low of $459.11 on August 4.

At that point, they had dropped almost 15% in the wake of Warren Buffett’s surprise announcement in early May that he will be stepping down as CEO at the end of the year.

That gives BRKB a YTD gain of 8.6%. (The A shares are up 8.5%)

Apple, which accounts for 6.35% of the S&P index, also closed at a record high today.

At $262.82 per share, it’s up more than 50% since Berkshire started selling shares in the fourth quarter of 2023.

Since then, Berkshire has cut its stake to 280 million shares as of June 30 from almost 916 million shares as of September 30, 2023.

That’s a reduction of 69%, although it remains the equity portfolio’s largest holding.

There may been more sales (or, conceivably, some buying) in this year’s third quarter. We’ll get the new share count from Berkshire in mid-November.

So far, the decision to sell isn’t looking very good.

If Berkshire had kept all its shares, the stake would have been valued at $241 billion today instead of the current $74 billion (assuming there hasn’t been any movement in the third quarter), a $167 billion gap.

Barron’s estimates Berkshire’s average selling price was around $185 per share, giving it a pretax gain of around $96 billion, leaving roughly $50 billion “on the table.”

And the profits Berkshire did realize were reduced by around $20 billion in taxes, by Barron’s calculations.

Buffett hasn’t said much about why he has sharply reduced the Apple stake.

His only public explanation came in an answer to a shareholder question at last year’s annual meeting.

Buffett said he expects Apple will remain Berkshire’s largest equity position well into the future, calling it an even better business than long-time holdings American Express and Coca-Cola.

But he also expects capital gains tax rates will be heading higher, so he thought shareholders wouldn’t mind paying a lower rate on what he then called a “little” Apple sale, rather than a higher rate later.

At that time, Berkshire had only reduced its stake by around 14%.

A video clip and transcript are in “Highlights from the Archive” below.

Berkshire Hathaway’s Jazwares, known for its “Squishmallows,” announced two partnerships this week.

It will be the “official worldwide plush Licensee” of next year’s FIFA World Cup.

The product line, including the “highly anticipated official mascot” of the soccer (US)/football (UK) tournament will be launched next June.

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Buffett: Prospect of higher tax rate in the future made sale of Apple shares more attractive now (2024)

Warren Buffett says he expects the capital gains tax rate will be going higher in the future as the U.S. tackles its deficit. While Berkshire generally doesn’t mind paying taxes, shareholders may appreciate that some Apple shares were sold at the current 21% rate, before tax bite gets deeper.

BECKY QUICK: “Have you or your investment managers’ views of the economics of Apple’s business or its attractiveness as an investment changed since Berkshire first invested in 2016?”

WARREN BUFFETT: No, I would — the — but we have sold shares. And I would say that at the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have.

Now … one thing that may surprise you, but we — almost everybody I know pays a lot more attention to not paying taxes than I think they should.

We don’t mind paying taxes at Berkshire. And we are paying a 21% federal rate on the gains we’re taking in Apple.

And that rate was 35 percent not that long ago, and it’s been 52 percent in the past when I’ve been operating.

It — the government owns — the federal government — owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings.

And they can change that percentage any year. And the percentage that they’ve decreed currently is 21 percent.

And I would say with the present fiscal policies, I think that something has to give. And I think that higher taxes are quite likely.

And if the government wants to take a greater share of your income, or mine, or Berkshire’s, they can do it.

And they may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences, and they may not want to decrease spending a lot. And they may decide they’ll take a larger percentage of what we earn. And we’ll pay it.

And we always hope at Berkshire to pay substantial federal income taxes. We think it’s appropriate that a company — a country that’s been as generous to our owners …

It doesn’t bother me in the least to write that check.

And I would really hope with all that America’s done for all of you, that it shouldn’t bother you that we do it.

And if I’m doing it at 21 percent this year, and we’re doing it at a lot higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year.

Berkshire’s top holdings of disclosed publicly traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today’s closing prices.

Holdings are as of June 30, 2025 as reported in Berkshire Hathaway’s 13F filing on August 14, 2025, except for:

The full list of holdings and current market values is available from CNBC.com’s Berkshire Hathaway Portfolio Tracker.

Due to a spreadsheet formula error, the pct. of portfolio figures have been incorrect for an embarrassingly large number of weeks. The problem is now fixed.

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don’t forward questions or comments to Buffett himself.)

If you aren’t already subscribed to this newsletter, you can sign up here.

Also, Buffett’s annual letters to shareholders are highly recommended reading. There are collected here on Berkshire’s website.

— Alex Crippen, Editor, Warren Buffett Watch