The news that Warren Buffett’s Berkshire-Hathaway (BRK.A -0.21%) (BRK.B 0.03%) sold half of its Apple (AAPL 1.37%) The stock likely came as a shock to many investors. Although it has often been considered the largest market cap stock in recent years, its growth played a significant role in Berkshire’s stock’s rise during that time.

But viewed from another perspective, the sale is probably not as monumental as it seems. Three key points illustrate why investors should not panic about this move.

1. Apple remains Berkshire’s largest holding

Despite the scale of the action, Berkshire Hathaway still owns around 400 million Apple shares. With a value of around $84 billion, it accounted for around 29% of Berkshire’s holdings at the end of the second quarter, far more than Bank of America at 14%.

Even with a dramatically smaller share count, Berkshire still holds a very undiversified position in Apple stock. Buffett has long preached diversification, and the 789 million Apple share position last quarter meant that Apple made up a little less than half of Berkshire’s portfolio.

Moreover, the remaining position implies that there is continued confidence in the company. Even though it faces competition from its mega-tech peers in the artificial intelligence space, its leadership in smartphones and the strength of the iOS ecosystem make it a technology leader.

In addition, Apple has around $153 billion in liquidity, giving it one of the world’s most stable balance sheets of any publicly traded company. This level of stability makes Berkshire’s large position less risky, and with this latest sale, the company is closer to having a diversified portfolio.

2. Apple shares had become (relatively) expensive

In addition, Buffett and his team may have been concerned about the company’s valuation. While the P/E ratio of 32 is not exactly excessive, the valuation has increased significantly over the years, making it more likely that the company has realized most of the expected share price appreciation.

Investors should keep in mind that Berkshire acquired the majority of its Apple shares between the first quarter of 2016 and the third quarter of 2018. In early 2016, Apple often traded at 10 times earnings.

The P/E ratio rose steadily during this time. However, it took until the third quarter of 2018 for the earnings multiple to rise above 20. Berkshire has therefore benefited from a significant increase in the multiple, leading to a stock increase of about 700% since Buffett’s team began buying. Since the S&P500 Apple has since achieved a total return of almost 200% and was the clear winner for Berkshire.

AAPL data from YCharts

3. Berkshire Hathaway’s size means the company needs liquidity

Another reason for the sale could be that it is difficult to run an investment company the size of Berkshire Hathaway, which has a market capitalization of around $890 billion at the time of writing.

While growth to this level is undoubtedly an impressive achievement, it comes with a major problem. Thanks to the law of large numbers, growth of just 10% means the market cap must grow by $89 billion. That’s just below average Market capitalization of an S&P 500 share, or $92 billion.

By comparison, the average company only needs to add $9.2 billion to achieve the same growth rate. This also means that a $9.2 billion acquisition, which would be significant for the average company, has little impact on Berkshire.

This brings us back to Berkshire’s cash position of $271 billion. While this may seem excessive, the company probably needs that much money to make meaningful acquisitions, so its cash position may not be as spectacular as many investors and analysts assume.

Understanding Berkshire Hathaway’s sale of Apple

Ultimately, investors should view the sale of Apple shares as an inevitable step rather than a game-changing one.

Yes, the sale is huge by any measure. However, the 400 million share position is still a significant vote of confidence in Apple’s future and represents a very undiversified portion of Berkshire Hathaway’s portfolio. Additionally, Apple has become relatively expensive, especially compared to when the company first started buying the shares.

Finally, Berkshire’s enormous size means that the company needs a significant liquidity position to make meaningful moves, so investors should not view this sale as historic for Berkshire, but as business as usual for the investment giant.