Apple’s Tumultuous Day Could Weigh on Berkshire’s Book Value

(Bloomberg) -- Apple Inc.’s stock slump is creating a headache for its third-largest shareholder, Warren Buffett’s Berkshire Hathaway Inc.

The iPhone maker’s shares fell as much as 9.6 percent Thursday, the most in more than three years, after its announcement Wednesday night that it was cutting its revenue outlook due to pressures in China and other factors. A decline of about 9 percent in the stock price, or about $14, would translate to “only a 0.74 percent” hit to Berkshire’s book value per share, according to an estimate from Keefe Bruyette & Woods analyst Meyer Shields.

Buffett’s company has been piling into Apple shares since 2016, and the holding is now Berkshire’s largest common-stock investment. The past month’s market volatility has put more pressure on Berkshire’s stock portfolio, which totals more than $207 billion. Based on Berkshire’s investments at the end of the third quarter, the volatility in the last three months of the year could cause an 8.2 percent hit to book value per share, Shields wrote.

Berkshire’s Class A shares dropped 3.3 percent to $294,025 at 10:24 a.m. in New York, while Apple shares slumped 8.8 percent to $143.97.

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