After the bell on Tuesday, shares of IBM (IBM) were about a percent lower on the news that Warren Buffett has significantly slashed his position in the company. For those that thought things were finally starting to improve in the technology giant, the post-earnings rally has disappeared, and this negative news will only add to the pain shareholders are currently feeling.
According to the latest required filing, Buffett sold more than 17 million shares of IBM during the third quarter of 2017, which represents almost $2.5 billion worth of shares if you look at where the stock traded on average during the three-month period. For those that are new to the market, this filing represented his holdings at the end of September; so there always is a delay on positions unless we hear otherwise.
This isn't the first time in 2017 that Buffett has sold IBM in a big way. As I detailed back in May, we had heard how the Oracle of Omaha had slashed his position by about a third from 81 million shares at the end of 2016. Given that Buffett's holding was about 37 million shares at the end of Q3, it means that he has now sold more than half of his position this year, although we're still talking about an investment of nearly $5.5 billion.
Last month, shares of IBM rallied after the company's third-quarter earnings report, one that featured top and bottom line beats. However, the EPS number was not that impressive given such a large revenue number, as margin pressures continued to weigh on a number of business segments. After rising more than 10% in the days following the report to more than $162.50, IBM shares have come right back down to where they were going into the report, as seen in the chart below.
