More than a quarter of Warren Buffett's Berkshire portfolio is Apple stock

Posted:
in AAPL Investors edited November 14
Despite worries that iPhone sales have plateaued, legendary investor Warren Buffett's Berkshire Hathaway increased its position in Apple by 522,802 shares during the third quarter of 2018, regulatory filings show.

Warren Buffett
Warren Buffett


According to a Securities and Exchange Commission filing released Wednesday, Berkshire owned 252,478,779 shares of AAPL at the end of September. The stake accounts for nearly 26 percent of the portfolio, up from just under 24 percent in the preceding quarter.

Whether Buffett unloaded -- or loaded up on more -- Apple stock since the reporting period ended is unknown.

Berkshire's latest investment continues to illustrate Buffett's confidence in the tech giant, even in the face of concerns that sales of iPhone, Apple's most important product, have peaked.

During its most recent quarterly earnings conference call, Apple said it will no longer report iPhone, iPad and Mac unit sales. The major shift, while in line with reporting practices adopted by other tech companies, prompted speculation that Apple wants to put a veil on iPhone sales numbers, which are no longer booming. During the most recent quarter, iPhone growth was flat year-over-year, and last quarter sales were up by a single percent from 2017.

"A unit of sale is less relevant today than it was in our past," Apple CFO Luca Maestri said during the conference call, adding that the number of units sold does not necessarily represent the relative health of a product's underlying business. Indeed, Apple is making more money than ever from iPhone, with premium pricing driving a surge in average selling price. For the fourth quarter, iPhone ASP touched an all-time high of $793.

Buffett appears to share Maestri's view of market health. In an interview earlier this year, the "Oracle of Omaha" explained why Apple represents a solid investment.

"I do not focus on the sales in the next quarter or the next year," Buffett said of iPhone. "I focus on the -- they won't tell you exactly how many -- but hundreds and hundreds and hundreds of millions of people who practically live their lives by it. And if you look at that little...piece of whatever it is, it's some the most valuable real estate in the world."

Berkshire first bought into Apple in 2016 with a share purchase worth about $1 billion, a figure that was extended to 57.4 million shares at the end of 2016. That stake increased to 133 million shares a quarter later.

Berkshire is now Apple's third-largest shareholder behind investment management firms Vanguard and BlackRock, with an approximately 5 percent stake in the company.

Comments

  • Reply 1 of 16
    What's his initial investment versus current value of AAPL holdings? Anyone?
  • Reply 2 of 16
    wood1208wood1208 Posts: 1,633member
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
  • Reply 3 of 16
    flydogflydog Posts: 108member
    What's his initial investment versus current value of AAPL holdings? Anyone?
    The stock has doubled in price since his initial purchase. 
    watto_cobra
  • Reply 4 of 16
    flydogflydog Posts: 108member

    wood1208 said:
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
    What is he supposed to do with an investment once it is no longer a good investment? 
    randy hill
  • Reply 5 of 16
    wood1208 said:
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
    That was just this year. I know he has quite the reputation, but he has come to the AAPL party really late in the game.

    https://www.cnbc.com/2018/02/14/berkshire-hathaway-13f-apple-aapl-stake-up-ibm-stake-down.html
  • Reply 6 of 16
    What's his initial investment versus current value of AAPL holdings? Anyone?
    We don’t know precisely. We’ll get another cost basis (for AAPL holdings) when Mr. Buffett issues his annual letter to shareholders next February.

    But we can calculate, from other things it reports, that Berkshire’s cost basis for its AAPL holdings was around $36 billion as of the end of the third quarter.
    edited November 14 SpamSandwichrandy hill
  • Reply 7 of 16
    Oops. 
  • Reply 8 of 16
    wood1208 said:
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
    It's a silly, worry-wart comment.

    I am guessing that Buffett held on to his IBM for at least a few.... decades...
    SpamSandwichrandy hill
  • Reply 9 of 16
    radarthekatradarthekat Posts: 2,709moderator
    flydog said:

    wood1208 said:
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
    What is he supposed to do with an investment once it is no longer a good investment? 
    Well, that’s the good news.  To Buffett, an investment is something you hold as long as the underlying business fundamentals remain intact.  He’s not the type who sells on a pop just because a stock might become temporarily overvalued.  He’s in it for the long haul and the tax efficiency associated with that investment philosophy.  He’s likely looking out at the long future of a company proven to be an innovative disruptor, knowing there are some very big markets still ripe for disruption (transportation and health maintenance/care come to mind).  
    techprod1gyMacProrandy hill
  • Reply 10 of 16
    flydog said:

    wood1208 said:
    Happy to hear Mr. Buffett's such high trust in AAPL but don't like when he decides to dump the stocks. It just kills it. IBM is one sad example.
    What is he supposed to do with an investment once it is no longer a good investment? 
    It's a bit early to say that Apple is no longer a good investment if that's what you're implying.  I'm sure Apple will regain most of its losses and Berkshire Hathaway will still be getting dividends.  However, once Buffett feels Apple is no longer worthwhile holding, he'll dump it as he did with his IBM stock.
  • Reply 11 of 16
    FatmanFatman Posts: 180member
    Berkshire 'does their research' - they buy and sell just before the market catches on - if you know what I mean. So investment by Buffet in Apple on a pullback probably means he knows something. Makes you wonder if the flood of supplier woes is fake news/market manipulation.

  • Reply 12 of 16
    Fatman said:
    Berkshire 'does their research' - they buy and sell just before the market catches on - if you know what I mean. So investment by Buffet in Apple on a pullback probably means he knows something. Makes you wonder if the flood of supplier woes is fake news/market manipulation.

    Berkshire didn't buy on the recent retreat as far as we know. It would be a safe assumption that they did already or are buying more now, however.
  • Reply 13 of 16
    His initial investment was $1B followed by significantly more every qtr since.
  • Reply 14 of 16
    Did you know that Warren’s other toy, BNSF Railroad, just switched over to iPads for all employees?  It’s working great.

    The smartest move Berkshire can do at this point is to buy a controlling interest in Corel and entice them to port to the Mac-iOS universe.
    SpamSandwich
  • Reply 15 of 16
    tbornot said:
    Did you know that Warren’s other toy, BNSF Railroad, just switched over to iPads for all employees?  It’s working great.

    The smartest move Berkshire can do at this point is to buy a controlling interest in Corel and entice them to port to the Mac-iOS universe.
    Buffett didn't tell BNSF to switch to iPads. He's famous for never telling CEO of businesses he invests in what to do. Even businesses that he buys entirely he just gets a monthly letter from the CEO telling him how the month went.

    Now if you mislead him or mismanage the business, that's another story. But he's never telling you to use products from another one of his portfolio companies, he's spoken at length about how he does not believe in "synergy" between his businesses, he views it as handcuffing their managers.
    SpamSandwich
  • Reply 16 of 16

    Fatman said:
    Berkshire 'does their research' - they buy and sell just before the market catches on - if you know what I mean. So investment by Buffet in Apple on a pullback probably means he knows something. Makes you wonder if the flood of supplier woes is fake news/market manipulation.

    Berkshire didn't buy on the recent retreat as far as we know. It would be a safe assumption that they did already or are buying more now, however.
    25% of his portfolio is a massive commitment, my guess is that he's reached his maximum portfolio holding size for a single investment and won't buy any more. Typically his goal is to run a focused portfolio of around 10 positions, which should be 10% each on average. 
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