The most important data release of the entire fourth quarter took place on Friday, November 14, and chances are you missed it.
No later than 45 calendar days after the end of a quarter, institutional investors with at least US$100 million of certain US traded assets under management are required to file Form 13F with the US Securities and Exchange Commission. This filing gives investors a snapshot showing what stocks, exchange-traded funds (ETFs), and select options contracts Wall Street’s smartest money managers bought and sold in the last quarter (in this case, the quarter ending in September).
While there is a laundry list of successful billionaire investors to keep an eye on, none are turning heads Berkshire Hathaway‘s (NYSE:BRK.B) Warren Buffett. The “Oracle of Omaha” has nearly doubled the annualized return of the S&P 500 since 1965. including dividends paid!
Berkshire Hathaway’s newest 13F had no surprises: Berkshire’s number 1, Apple (NASDAQ:AAPL) was meaningfully downsized, while another member of the “Magnificent Seven” was introduced as a core holding on the frontier.
Nearly three-quarters of Berkshire’s stake in Apple has been eliminated in two years
Let me preface the following discussion with two critical points. First, Buffett is a steadfast optimist who would never bet against the US stock market. He is a long-term investor through and through.
The second thing you need to know, however, is that he is an avid value investor. If the Oracle of Omaha doesn’t believe he’s getting a good deal, a host of competitive advantages could keep him from becoming a potential seller of a publicly traded company.
With the above, Berkshire has been a persistent seller of Apple stock since September 30, 2023, downgrading this position in six of the last eight quarters. Including the 41,787,236 shares sold during the third quarter, a total of 677,347,618 shares were sold over the two-year period, representing a 74% reduction.
It is certainly plausible that profit taking is the main reason for this sales activity. At Berkshire Hathaway’s 2024 annual shareholder meeting, Buffett opined that a higher (expected) peak marginal corporate tax rate was on the way, and that it would be wise to lock in some of Berkshire’s unrealized investment gains at a preferential rate. No investment holding company has amplified Berkshire’s unrealized profits as much as Apple.
The concern for investors is that there may be more to this story than meets the eye.
For example, despite having a generally loyal customer base and a valuable brand, Apple’s growth engine has been relatively stagnant for years. While revenue from subscription services remains the only bright spot, sales of physical devices, including the popular iPhone, have been somewhat stable for almost four years. In other words, Apple is no longer the growth story it once was.
To add fuel to the fire, Apple’s valuation has risen to eyebrow-raising levels amid this lack of meaningful revenue growth. While the company’s market-leading share buyback program has undoubtedly helped boost earnings per share (EPS) over time, Apple is valued at a trailing-twelve-month price-to-earnings (P/E) ratio of almost 37, which is a 22% premium to the average TTM P/E ratio over the past five years.
While Buffett has been known to bend some of his unwritten investing rules, he doesn’t waver when it comes to value. Apple is no longer the screaming bargain it once was.
The Oracle of Omaha has taken a stake of more than $4 billion in a truly great company
At the other end of the spectrum, Buffett oversaw the purchases of seven securities during the third quarter. None of these purchases caused more of a stir on Wall Street than the Magnificent Seven member’s 17,846,142 shares purchased Alphabet (NASDAQ:GOOG). Buffett’s company specifically bought the Class A voting stock (NASDAQ:GOOGL), with the value of this position handily exceeding $4.3 billion at the end of September.
The bulk of Berkshire Hathaway’s buying activity over the past three years has consisted of acquiring positions ranging from $10 million to as much as $1.7 billion. In just three months, Buffett’s company built up a stake of more than $4 billion in Google parent company Alphabet, making this stock, which has risen more than 11,000% since its initial public offering (IPO), a core position on the frontier (1.6% of Berkshire’s invested assets).
The first important box Alphabet checks for Berkshire’s billionaire chief is its sustainable moat. According to data collected by GlobalStats, Google has been responsible for between 89% and 93% of the global Internet search share since 2015. Even the rise of large language models (LLMs) hasn’t threatened Google’s near-monopoly status in web search, which is fantastic news for the company’s ad pricing power.
To build on the previous point, Buffett is usually a big fan of cyclical companies. He is aware of the non-linear nature of economic cycles – periods of economic growth last substantially longer than recessions – and positions Berkshire’s investment portfolio to take advantage of these long-winded growth opportunities. Advertising-driven companies, such as Google and Alphabet’s YouTube streaming service, benefit from disproportionately long periods of economic expansion.
Alphabet is also a major player in cloud infrastructure services. According to Synergy Research Group, Google Cloud accounted for an estimated 13% of the global share of cloud infrastructure services in the third quarter. Google Cloud revenue rose 25% in the quarter ending in September compared to the same period last year, with annual revenue now exceeding $60 billion. The integration of generative artificial intelligence and LLMs into Google Cloud for customers can further accelerate the growth of this segment.
Further down the list, Alphabet’s balance sheet is something to be surprised about. The company ended the quarter with $98.5 billion in combined cash, cash equivalents and marketable securities, and has generated $112.3 billion in cash from its operations through the first nine months of 2025. This abundance of capital allows Alphabet to make aggressive investments in high-growth initiatives, as well as buy back its shares and pay a dividend to its shareholders. Buffett has always been a fan of robust capital return programs.
The icing on the cake is that Alphabet’s valuation makes sense. While TTM’s price-to-earnings ratio of 27 may not seem cheap at first glance, Alphabet’s expected annual revenue growth of 13% to 14% per year suggests it has more upside than Apple in the longer term.
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