Apple’s latest stock valuation means investor Warren Buffett’s holding are now worth three times what he originally paid for them in 2016.
A new report from Business Insider explains that the investor’s conglomerate Berkshire Hathaway has seen its $35 billion USD stake in Apple triple in value to around $104 billion, following the stock reaching a new all-time high on Friday.
Apple’s stronger-than-expected Q3 earning report of $59.7 billion USD took investors by surprise, fueling a steep rise in the stock price and briefly positioning the Cupertino company above Saudi Aramco as the most valuable in the world.
Buffett reportedly began investing in Apple in 2016 with a purchase of 9.81 million shares, worth around $1 billion USD. Just a few years later, in 2019, Buffett supplemented that initial investment with another $35.287 billion USD spent on Apple shares.
Apple is Berkshire Hathaway’s largest investment by far, worth more than four times as much as its second-largest holding — a $25 billion USD stake in Bank of America. Berkshire Hathaway’s market capitalization currently sits at about $476 billion USD, notes MacRumors, suggesting its 5.7 percent stake in Apple accounts for more than a fifth of its entire value.
Buffett’s newsletter also explained the reasons for its stock selections.
Charlie and I do not view the $248 billion detailed above as a collection of stock market wagers – dalliances to be terminated because of downgrades by “the Street,” an earnings “miss,” expected Federal Reserve actions, possible political developments, forecasts by economists or whatever else might be the subject du jour.
What we see in our holdings, rather, is an assembly of companies that we partly own and that, on a weighted basis, are earning more than 20% on the net tangible equity capital required to run their businesses. These companies, also, earn their profits without employing excessive levels of debt.
Returns of that order by large, established and understandable businesses are remarkable under any circumstances. They are truly mind-blowing when compared to the returns that many investors have accepted on bonds over the last decade – 21⁄2% or even less on 30-year U.S. Treasury bonds, for example.
The value of Berkshire’s Apple stake relative to the rest of its portfolio and its market cap underscores the extent to which investors are prizing tech companies and neglecting more staid businesses such as banks, insurers, and railroads.