By
Bhushan Akolkar
April 12th, 2024
Over the last few years, the giant stake in Apple (AAPL) stocks acquired by a prominent investor Warren Buffett has paid off significantly with more than 80% returns.
Warren Buffett‘s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is an investment behemoth with a great ability to select the right purchases. Regardless of the general volatility in most financial markets, Berkshire Hathaway has pulled in significant results from its investments over the last couple of years. Last year, Warren Buffett famously said he was in search of “elephants” referring to large stock purchases. Recent reports now suggest that Warren Buffett and Berkshire Hathaway just might have found this elephant in Apple Inc. (NASDAQ: AAPL) stock.
Apple (AAPL) Is Warren Buffet’s Elephant Stock
According to a WSJ story, Berkshire has maintained its position in Apple since the beginning of 2016. In its annual report for the end of 2018, Berkshire specified that it spent $36 billion to acquire a stake in Apple. The amount is more than what the company spent for an acquisition of Precision Castparts in 2016 which was worth $32.7 billion. It is still the company’s largest acquisition of one company.
Today, Berkshire’s position in Apple is now worth $78.5 billion, about 5.6% of the tech company. As of yesterday, 14% of Berkshire’s portfolio was AAPL.
Gardner Russo & Gardner partner Thomas Russo believes that for Berkshire, the Apple position “certainly is an elephant.”
How Warren Buffet Got Into Apple (AAPL) Stock
It is common knowledge that for many years, Warren Buffett generally stayed away from tech stocks. The CEO and chairman said many times over those years that the reason was that he didn’t understand them.
In 2016, Warren Buffett said one of Berkshire’s managers (he didn’t specify whether it was Todd Combs or Ted Weschler) spent $1 billion in acquiring Apple shares. This seemed to pique Buffett’s interest and he began to follow up a bit more closely. Since then Berkshire’s Apple position continued to increase as Buffett began to acquire Apple stock quite religiously.
The decision to buy AAPL turned out to be a great one because, over the last 12 months, AAPL has climbed over 85.18%. This year alone, AAPL boasts of more than 9% in returns.
Buffet Diversifies Away From Apple
In the fourth quarter of 2019, Berkshire offloaded heavy positions in quite a few companies. Berkshire sold more than 55 million shares in Wells Fargo, over 6 million in Goldman Sachs, and over 2 million in the Bank of America. Berkshire also sold almost 3.7 million shares from Apple.
While it is possible that Warren Buffett himself didn’t exactly have anything to do with the Apple sale, the company’s decision to sell about $800 million worth of AAPL is an interesting one.
Recently, Berkshire bought 19 million shares in grocery chain firm Kroger and also acquired a position with biotech company Biogen.
Berkshire Hathaway Stock
Berkshire’s Class A shares (NYSE: BRK.A) is currently at $342,122, after losing 0.55%. BRK.A in the last year has returned a little over 13%. For year-to-date gains, the stock has returned less than 1%.
BRK.B has performed just a little better this year. Trading at $228.66, it has returned 1.09% in 2020. Its 1-year gains are however just a little over 13% as well, at 13.40%.