Billionaire Warren Buffett Sold 67% of Berkshire’s Stake in Apple and Is Piling Into a Beloved Consumer Brand Whose Stock Has Soared by 7,000% Since Its IPO

But there may be more to this selling activity than meets the eye.

Even though Warren Buffett hinted at tax-related selling at Berkshire’s annual shareholder meeting, he might be less than impressed with Apple’s valuation. The Oracle of Omaha is an ardent value investor, and Apple is currently trading at 38 times trailing-12-month earnings. Apple’s historically high valuation multiple is on par with the S&P 500‘s Shiller price-to-earnings (P/E) ratio hitting its third-highest valuation multiple, when back-tested to January 1871.

Additionally, Apple’s physical product sales have stalled over the last two years. While subscription services growth has been robust, demand for iPhone, Mac, iPad, and accessories has been lukewarm, at best.

Despite being a big-time net seller of stocks in 2024, Warren Buffett and his top investment advisors, Todd Combs and Ted Weschler, have done some very selective buying. Examples include building up their stake in Wall Street’s most-popular reverse stock split, Sirius XM Holdings, as well as adding to property and casualty insurer Chubb, which was Berkshire’s confidential holding until mid-May.

During the September-ended quarter, Buffett and his team did very little buying… with one exception. The largest purchase of the third quarter was to open a brand-new position in beloved fast-food restaurant chain Domino’s Pizza (NYSE: DPZ). The 1,277,256 shares purchased equated to almost $550 million in market value, as of the end of September.

Domino’s Pizza has been one of the top-performing stocks on Wall Street since its initial public offering (IPO) in 2004. Since its debut on July 13, 2004, shares have catapulted higher by more than 7,000%, factoring in dividends and the robust after-hours move associated with Berkshire Hathaway’s 13F filing.

In December of last year, Domino’s introduced its five-year plan that it dubbed “Hungry for MORE.” The reason “MORE” is capitalized is because it represents an acronym for the ways the company aims to improve its operating efficiency and customer loyalty in the years to come.

Domino’s “M” is about creating the “most delicious food,” and is inspired by new menu offerings and the consistency of its food-prep process. The “O” stands for “operational excellence” and is focused on food consistency and maximizing output through its proprietary tech-driven operating system. The “R” is about “renowned value” and relates to the company’s rewards program, which is designed to keep customers loyal to the brand. Lastly, the “E” is for “enhancing” the brand’s value through its franchisees.

Warren Buffett is a huge fan of management teams that own their successes and their failures. Domino’s success really kicked off in the early 2010s with its mea culpa advertising campaign. The company hasn’t been afraid to admit past mistakes (i.e., that its pizza was subpar) and has successfully built rapport with consumers through its honest marketing.

The Oracle of Omaha is also attracted to companies with shareholder-friendly capital-return programs. Domino’s has increased its base annual payout for more than a decade and has repurchased its shares in all but a handful of quarters. A majority of Berkshire Hathaway’s holdings are time-tested dividend payers.

Although it’s hard to argue against Domino’s stellar return, a forward P/E ratio of 27 isn’t exactly cheap. It’ll be interesting to see if the Oracle of Omaha and his team build on this position in the quarters to come.

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Sean Williams has positions in Sirius XM. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Domino’s Pizza. The Motley Fool has a disclosure policy.

Billionaire Warren Buffett Sold 67% of Berkshire’s Stake in Apple and Is Piling Into a Beloved Consumer Brand Whose Stock Has Soared by 7,000% Since Its IPO was originally published by The Motley Fool