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Warren Buffett Sold Position in IBM: Is Danger Ahead?

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Warren Buffett on IBM

Iconic investor Warren Buffett disclosed that his firm Berkshire Hathaway (BRK-B) sold its entire position in International Business Machines (IBM) in 1Q18.

When asked in the interview whether Berkshire Hathaway was holding any IBM stock, Buffett replied, “No. I think we have zero.” In 4Q17, IBM was Berkshire Hathaway’s top sell. The firm has been gradually trimming its position in IBM since mid-2016. Berkshire Hathaway held nearly 2 million shares of IBM in 4Q17.

Buffett’s decision to sell IBM and gradually increase the firm’s position in Apple (AAPL) highlights a trend change in the technology sector (XLK). IBM has been struggling a lot with its enterprise technology. The slower earnings growth is affecting investors’ sentiment on the stock.

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IBM’s performance

IBM stock has fallen 25% in the past five years. It has fallen 4.3% in the last year, while the broader market S&P 500 Index (SPY) rose 12% in the same period. The Technology Select Sector SPDR ETF (XLK), which tracks the performance of the technology sector, rose 21.7% in the last one year.

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