Buffett’s Big Sell-Off: Billionaire Investor Dumps More Apple Stock, While Shumacom Faces Delisting Danger

Warren Buffett disposes of another large amount of Apple stock, New York Stock Exchange warns of delisting of Shumacom SMCI

Click to enlarge image New York Stock Exchange Apple

Warren Buffett, a big hand in New York, sold off Apple stocks on a large scale again. On the New York Stock Exchange, reports are coming out one after another that Shumacom, which had its audit opinion rejected due to accounting manipulation, will eventually be delisted. This rumor about the delisting of Shumacom SMCI is shaking artificial intelligence-related stocks such as Nvidia, Tesla, and Broadcom.

According to the New York Stock Exchange on the 3rd, the cash holdings of Berkshire Hathaway (Berkshire), led by investment guru Warren Buffett (94), reached an all-time high of about $325.2 billion, Bloomberg News and U.S. economic media outlet CNBC reported simultaneously. According to Berkshire’s third-quarter financial report, the company’s cash reserves increased by $48.3 billion, from $276.9 billion at the end of the second quarter to $325.2 billion at the end of the third quarter. Berkshire’s cash holdings increased further as it sold additional shares of Apple and Bank of America among its large stocks. In particular, he sold about 25% of his Apple shares.

Berkshire continued its overall stock selling trend by net selling more than $34 billion (approximately 46.937 trillion won) worth of stocks in the third quarter. Buffett has been using some of his cash reserves to buy back shares, but recently, as Berkshire’s stock price has risen significantly, he has stopped doing so. Berkshire’s stock price has risen 25% this year, bringing its market capitalization to approximately $974 billion as of the closing price on the 1st. On August 28, the market cap exceeded $1 trillion for the first time.

On the New York Stock Exchange (NYSE) over the weekend, the Dow Jones Industrial Average closed trading at 42,052.19, up 288.73 points (0.69%) from the previous day. The Standard & Poor’s (S&P) 500 index closed at 5,728.80, up 23.35 points (0.41%) from the previous day, and the Nasdaq Composite Index closed at 18,239.92, up 144.77 points (0.80%) from the previous day. The Philadelphia Semiconductor Index, which consists of artificial intelligence (AI) and semiconductor-related stocks, also jumped 54.68 points (1.11%) to 5,001.42, making up for some of the recent sharp decline. The Philly Semiconductor Index plunged 3.35% on the 30th of last month and 4.01% the day before.

The key ingredient in the market on this day was new employment in the US non-agricultural sector in October, but when we opened the lid, it was not a refined ingredient. The results were shocking and far below expectations, but the problem is that reliability was low due to various noises such as hurricanes and large-scale strikes. The U.S. Department of Labor announced that new non-farm payrolls in the United States increased by 12,000 in October compared to the previous month. The New York stock market had expected a significant decline in employment in October, taking into account the aftermath of Hurricanes Milton and Hurlin, which hit the U.S. state of Florida, and strikes by the port union and aircraft manufacturer Boeing. However, the employment of 10,000 people was a shock, as an increase of 100,000 to 110,000 people was expected.

According to the Ministry of Labor, the first response rate in October to the Establishment Survey, which calculates non-farm employment, was only 47.4%. It was the lowest in about 34 years since January 1991 and significantly lower than last year’s monthly average of 64.5%. The October employment report showed a significant slowdown compared to September, but the figure was mixed with noise due to hurricanes and strikes.” “It is unlikely that the Federal Reserve will avoid a 25bp interest rate cut at the November meeting,” he said. The New York stock market used Amazon’s strong performance instead of employment indicators as the basis for a rebound.

Amazon announced that its sales for the third quarter of this year were $158.9 billion and EPS was $1.43. Both figures beat market expectations. In particular, Wall Street responded to the fact that the strength of the cloud and advertising businesses was maintained with a 6.2% increase in the stock price. On the other hand, Apple’s stock price fell 1.33% as a slowdown was detected in China, its main market, despite its performance exceeding market expectations. Intel’s stock price jumped nearly 8% as it presented an optimistic outlook for the fourth quarter despite having a massive loss of $17 billion in the third quarter. American aircraft manufacturer Boeing’s stock price rose 3.5% on the news that labor and management had tentatively agreed to a negotiation plan aimed at raising wages by 38% over four years. Among AI-related stocks, Nvidia, TSMC, and Qualcomm rose by more than 1%. On the other hand, Broadcom and AMD fell slightly.

The Institute for Supply Management (ISM) announced that the manufacturing purchasing managers’ index (PMI) recorded 46.5 in October. This figure is worse than the market expectation (47.6) and the previous month’s figure of 47.2. ISM said that the manufacturing industry has continued to contract for seven consecutive months, and that it has been in contraction for 23 of the past 24 months. S&P Global’s September U.S. manufacturing PMI was 48.5, an improvement over the previously announced preliminary value of 47.8 and the previous month’s figure of 47.3, but it was pointed out that malicious factors were accumulating. According to the New York Stock Exchange’s Chicago Mercantile Exchange (CME) fedwatch tool, the probability that the benchmark interest rate will be frozen in November in the federal funds rate futures market disappeared by the end of the day, and the probability of a 25bp cut rose to 98.6%. The possibility of a ‘big cut’ (50bp interest rate cut) has reared its head at 1.4%. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) recorded 21.88, down 1.28 points (5.53%) from the previous day.

Shumacom’s stock price closed at $26.05, down 10.51% from the previous day. It fell to $25.71 during the day, hitting a 52-week low and narrowing the decline slightly, but based on the closing price, it is the lowest since November 3, 2020 ($23.21). A series of bad news since last August has dragged the stock price down to the bottom. Shumacom disclosed its stock split policy 10:1 on August 6 and began trading at the split price as of the 1st of last month. Shumacom’s stock price has soared for a year since it launched a server equipped with NVIDIA (NAS:NVDA) graphics processing unit (GPU) last year.

Shumacom’s ordeal began on August 7 when it released quarterly results in which earnings per share (EPS) and sales fell short of market expectations and gross margin continued to decline. On that day, the stock price plummeted 20.14% compared to the previous day. As it became the target of Hindenburg Research, a hedge fund specializing in short selling, the stock price was unable to control itself. Hindenburg filed charges of accounting manipulation and fraudulent transactions against Shumacom in late August. It was reported that the U.S. Department of Justice began a related investigation in late September. Shumacom denies the charges, but bad news continues.

As news broke that EY (Ernst & Young), the accounting firm in charge of Shumacom’s audit work, had terminated the contract, saying, “We can no longer provide auditing services in accordance with professional ethics,” Shumacom’s stock price plummeted by 32.68% again. did it Shumacom said, “We do not agree with EY’s decision and are looking for a new accounting firm,” but on the 31st, the stock price fell further by 11.97% and eventually plummeted to its lowest point. Shumacom YTD stock return turned negative. As of this day, it has fallen -8.76%, -64.72% in the last 6 months alone, and 45.50% in the last 5 trading days alone.

Daeho Kim, Director of Global Economic Research Institute tiger8280@g-enews.com