Warning: Warren Buffett Keeps Selling His Favorite Stock for a Surprising Reason

Warren Buffett is a big believer in long-term investing. In fact, many of his largest positions have been in his portfolio for decades. And while he and his lieutenants regularly adjust the publicly traded portfolio at Berkshire Hathaway, there's a lot less turnover than most professionally managed funds. So when Buffett and company start to heavily sell one of Berkshire's biggest investments of all time, every investor should pay attention.

This stock remains one of Berkshire's biggest bets of all time

In early 2016, Buffett and his investing team began accumulating shares of Apple (NASDAQ: AAPL). Soon, Apple became the largest public holding in Berkshire's history, with a stake worth roughly $100 billion.

What do Buffett and Berkshire like so much about Apple? Earlier this year, Buffett compared Apple to two other fixtures in Berkshire's portfolio: Coca-Cola and American Express:

I can't really think of a company like American Express that has a position and a credit card that is extremely strong. It has strengthened dramatically over the last 20 years for a lot of reasons. That's the story of why we own American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business. And we own Apple, which is an even better business, and we will own, unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola.

It's quite amazing that Buffett not only compared Apple to Coca-Cola and American Express -- blue chip stocks that have been in his portfolio for decades -- but he also declared that Apple's business model was even better than those iconic businesses.

When discussing American Express, he highlighted the company's immense brand value. American Express cardholders often remain loyal to the company for huge portions of their life, and spend disproportionately more than other card providers like Visa and Mastercard. Buffett's comments about Apple show the same enthusiasm for its brand power.

"If you're an Apple user and somebody offers you $10,000, but the only proviso is they'll take away your iPhone and you'll never be able to buy another, you're not going to take it," Buffett told CNBC last year.

But if Buffett likes Apple so much, declaring that it will remain in Berkshire's portfolio "unless something really extraordinary happens," why has Berkshire been consistently trimming its Apple stake? Last quarter alone it nearly cut its Apple position in half.

Make no mistake: Buffett remains a big fan of Apple shares

Even after aggressively selling its Apple stake, the company remains Berkshire's biggest position in its publicly traded portfolio, with a value of roughly $85 billion. Its next biggest position, American Express, is worth just $35 billion.

Berkshire still clearly believes in the company. Otherwise, it would have trimmed the position even further. The true reason behind the selling is a mix of factors, not all of which reflect poorly on Apple in particular.

For instance, Buffett has claimed that he believes capital gains taxes will have to rise in the future. By taking the gains now, he theoretically reduces his potential tax burden in the future.

Perhaps even more important, however, is Buffett's belief that equity markets overall are overpriced. He recently noted that he "sees few cheap, high-quality companies in which to invest" right now. Trimming the Apple position, therefore, might just reflect an increasing level of caution about markets in general.

Buffett is still a fan of Apple as a company. And he still believes the business is worth the No. 1 position in Berkshire's portfolio. But Apple shares are no longer the deal they once were.

And Buffett's concern about markets overall should give all investors pause when making any single business such a huge part of their portfolio. Right now, Buffett is trimming many of his positions, leading to a record-breaking cash pile for Berkshire. He knows that if markets fall, Apple's value will likely follow suit, even if it remains attractive as a business.

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American Express is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.