The billionaire investor has referred to the company as one of Berkshire Hathaway’s largest businesses, third only to its insurance and railroad interests.
Billionaire investor Warren Buffett’s big bet on Apple has paid off in a major way, making more than $120 billion on paper as the tech giant reached a milestone $3 trillion market valuation this week, CNBC reports.
Berkshire Hathaway started purchasing Apple stock in 2016, and by mid-2018, the conglomerate had amassed 5% of the company — a stake that cost $36 billion. In 2022, that Apple investment is worth a whopping $160 billion. The iPhone maker also rewards its investors with dividends, and Berkshire has received regular payouts averaging $775 million per year.
Despite Apple’s clear and sustained growth, investing in Steve Jobs’s brainchild wasn’t always on Buffett’s radar; historically, the “Oracle of Omaha” has been wary of heavy-hitting tech stocks, but that’s changed in recent years. Today, Berkshire’s Apple stake comprises more than 40% of its equity portfolio, per InsiderScore.com calculations, and Buffett has referred to the company as one of Berkshire’s largest businesses, third only to its insurance and railroad interests.
Buffett has called the iPhone a “sticky” product, one that keeps consumers coming back on a consistent basis. “[Apple is] probably the best business I know in the world,” Buffett said in a CNBC interview in February 2020. “I don’t think of Apple as a stock. I think of it as our third business.”
Buffett often says that appreciating shares can fluctuate further and therefore aren’t yet real gains, but Berkshire has realized some of its Apple-investment profit; in 2020, the conglomerate sold off some of its holdings and came away with $11 billion.
But Apple’s continuous buybacks have sustained its healthy growth and increased Berkshire’s total stake in the company. “Berkshire’s investment in Apple vividly illustrates the power of repurchases,” the conglomerate said in its 2020 annual report. “Despite that sale [in 2020] – voila! – Berkshire now owns 5.4% of Apple. That increase was costless to us, coming about because Apple has continuously repurchased its shares, thereby substantially shrinking the number it now has outstanding.”
https://www.entrepreneur.com/article/411596
