Warren Buffett’s Berkshire Hathaway recently made some notable changes to its stock portfolio. The company sold many of its Apple shares and started a new position in Ulta Beauty. In the second quarter, Berkshire sold 389 million shares of Apple, cutting its stake in half.
Apple had been Berkshire’s largest holding, but the sale reduced its position from 51% of the portfolio to 30%. Buffett has praised Apple as a great business in the past. However, the stock’s valuation has risen to over 30 times forward earnings, higher than Buffett typically prefers.
Apple still delivered solid results in its latest quarter. Sales and earnings beat expectations, with 5% revenue growth and 11% net income growth. The company has a strong presence in PCs, smartphones, and services.
But Apple faces some challenges. New regulations in Europe could impact its App Store dominance.
Buffett adjusts Berkshire portfolio allocation
Its smartphone market share in China has slipped. And it hasn’t launched a major new hit product in several years. Berkshire trimmed its Apple stake and initiated a small position in Ulta Beauty.
Ulta operates over 1,400 stores in the U.S., selling a wide range of beauty products. Ulta’s latest quarterly results were disappointing, with flat sales growth and declining profits. However, some analysts believe Ulta can rebound through store expansion and e-commerce investments.
Based on earnings growth estimates, the stock also appears more reasonably valued than Apple. Berkshire’s moves reflect Buffett’s value investing approach and willingness to adapt the portfolio as conditions change. The Apple sale locks in profits on a highly valued stock, while the Ulta purchase seeks opportunity in an underperforming but promising retailer.
With Berkshire continuing to hold significant stakes in both Apple and Ulta, the changes represent a rebalancing rather than a major strategic shift. Buffett’s long-term focus and risk management remain central to Berkshire’s investment philosophy.
