“According to Berkshire Hathaway’s annually released shareholder letter, the S&P 500 has gained 19,784% over the past 55 years, inclusive of dividend payments,” Sean Williams writes for The Motley Fool. “However, Berkshire Hathaway’s per-share market value has increased 2,744,062% over the same period.”
But one thing Buffett is not is an investor that necessarily believes in diversification. In the Oracle of Omaha‘s words, “diversification is protection against ignorance.” In other words, if you know what you’re doing as an investor, there’s no need to diversify your portfolio beyond a few core businesses.
Right now, one stock — Apple — comprises a whopping 43% of Warren Buffett’s portfolio. As of this past week, Berkshire Hathaway’s position in Apple had grown to $91.3 billion, which compares to $213.6 billion for the company’s entire 46-security investment portfolio. Put in another context, Apple’s influence on Buffett’s investment portfolio is greater than every other equity stake, combined, with the exception of Berkshire’s No. 2 holding, Bank of America…
The thing you need to understand about Buffett is that he loves companies with sustainable competitive advantages, sound branding, and a strong management team. Apple brings all three to the table… And don’t forget about Apple’s shareholder return program. Apple has been willing to borrow money at exceptionally low rates in order to repurchase its own stock, which is a strategy that Buffett fully endorses.
MacDailyNews Take: As Jim Cramer like to say of Apple, “Own it, don’t trade it.”