The most important data release of the entire fourth quarter occurred on Friday, Nov. 14, and there's a good chance you might have missed it.
No later than 45 calendar days following the end of a quarter, institutional investors with at least $100 million in assets under management are required to file Form 13F with the Securities and Exchange Commission. This filing provides a snapshot for investors that spills the beans on which stocks, exchange-traded funds (ETFs), and select option contracts Wall Street's savviest money managers bought and sold in the latest quarter (in this instance, the September-ended quarter).
Although there's a laundry list of successful billionaire investors to monitor, none garners attention quite like Berkshire Hathaway's (BRK.A0.41%)(BRK.B0.57%) billionaire boss, 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 latest 13F wasn't short on surprises. Berkshire's No. 1 holding, Apple (AAPL+0.42%), was meaningfully pared down, while another member of the "Magnificent Seven" was introduced as a borderline core holding.
Nearly three-quarters of Berkshire's stake in Apple has been axed in two years
Let me preface the following discussion with two critical points. First, Warren Buffett is an unwavering optimist who would never bet against America or the U.S. stock market. He's a long-term investor at heart.
However, the second must-know point is that he's an ardent value investor. If the Oracle of Omaha doesn't believe he's getting a good deal, no number of competitive advantages can keep Buffett from potentially being a seller of a public company.
With the above being said, Berkshire's billionaire boss has been a persistent seller of Apple stock since Sept. 30, 2023, with this position being cut in six of the last eight quarters. Including the 41,787,236 shares disposed of during the third quarter, a total of 677,347,618 shares were sold over the two-year period, representing a 74% reduction.
It's certainly plausible that profit-taking is the primary reason for this selling activity. During Berkshire Hathaway's annual shareholder meeting in 2024, Buffett opined that a higher (expected) peak marginal corporate income tax rate was coming, and that locking in some of Berkshire's unrealized investment gains at an advantageous rate would be wise. No investment holding has bulked up Berkshire's unrealized profits quite like 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. Although subscription services revenue continues to be the one bright spot, sales of physical devices, including the popular iPhone, have been somewhat flat for nearly 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 been expanding to eyebrow-raising levels amid this lack of meaningful sales growth. While the company's market-leading share repurchase program has undoubtedly helped boost its earnings per share (EPS) over time, Apple is valued at a trailing-12-month (TTM) price-to-earnings (P/E) ratio of nearly 37, which is a 22% premium to its average TTM P/E ratio over the trailing-five-year period.
While Warren Buffett has been known to bend some of his unwritten investing rules, he doesn't budge when it comes to value. Apple is no longer the screaming bargain it once was.
The Oracle of Omaha has taken a greater-than $4 billion stake in a truly magnificent company
At the other end of the spectrum, Berkshire Hathaway's soon-to-be-retiring billionaire CEO oversaw purchases in seven securities during the third quarter. None of these buys made more waves on Wall Street than the 17,846,142 shares purchased of Magnificent Seven member Alphabet (GOOGL+3.02%)(GOOG+2.82%). Buffett's company specifically purchased the Class A (GOOGL) voting shares, with the value of this position handily surpassing $4.3 billion by the end of September.
Most of Berkshire Hathaway's purchasing activity over the last three years has involved establishing positions ranging from $10 million to as much as $1.7 billion. In just three months, Buffett's company built a stake exceeding $4 billion in Google parent Alphabet, making this stock, which has gained more than 11,000% since its initial public offering (IPO), a borderline core holding (1.6% of Berkshire's invested assets).
The first important box Alphabet checks off for Berkshire's billionaire chief is its sustainable moat. Google has accounted for between 89% and 93% of global internet search share since 2015, according to data compiled by GlobalStats. Not even the emergence of large language models (LLMs) has threatened Google's near-monopoly status for internet search, which is fantastic news for the company's ad-pricing power.
To build on the previous point, Warren Buffett tends to be a big fan of cyclical businesses. He's aware of the nonlinear 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. Ad-driven businesses, such as Google and Alphabet's streaming service YouTube, benefit from disproportionately long periods of economic expansion.
Alphabet is also a key player in the cloud infrastructure service space. Google Cloud accounted for an estimated 13% of global cloud infrastructure service share for the third quarter, according to Synergy Research Group. Sales for Google Cloud jumped 25% in the September-ended quarter from the prior-year period, with an annual revenue run rate that now surpasses $60 billion. The incorporation of generative artificial intelligence and LLMs into Google Cloud for clients can further accelerate this segment's growth rate.
Continuing down the list, Alphabet's balance sheet is something to marvel at. The company closed out the quarter with $98.5 billion in combined cash, cash equivalents, and marketable securities, and has generated $112.3 billion in cash from its operating activities through the first nine months of 2025. This abundance of capital enables Alphabet to make aggressive investments in high-growth initiatives, as well as repurchase its stock and distribute a dividend to its shareholders. Warren Buffett has always been a fan of hearty capital-return programs.
The cherry on top is that Alphabet's valuation makes sense. Although its TTM P/E ratio of 27 might not appear inexpensive on the surface, Alphabet's projected annual sales growth rate of 13% to 14% per year suggests it offers more long-term upside than Apple.
