Berkshire posts record operating profit, cuts Apple stake

The news: Warren Buffett's conglomerate Berkshire Hathaway posted a record first quarter operating profit and significantly reduced its enormous stake in Apple.

The numbers: First-quarter operating profit jumped 39% to USD11.22 billion ($16.95 billion), or about USD7,807 per Class A share. Its cash hoard swelled to a record USD189 billion, helped in part by an estimated sale of about 115 million shares, or 13% of its Apple holdings in the quarter. It still holds about 790 million shares in the tech giant.

The context: Analysts said Berkshire continued to benefit from attractive yields on short-term investments and large cash balances during the quarter. Warren Buffett assured shareholders at Berkshire's annual meeting that "unless something dramatic happens that really changes capital allocation, we will have Apple as our largest investment." He said he doesn’t mind expanding the cash stake, in light of alternatives in the equity markets and conflicts around the world, and said cash could top USD200 billion by the end of June.

A large sale is an about-face for Buffett, who is normally tech-phobic but came to view Apple as a consumer goods company with strong pricing power and devoted customers. Some investors, however, have expressed concern that Apple consumed too much of Berkshire's investment portfolio.