Warren Buffett called Apple one of “Four Giants” and the second-most important business after Berkshire Hathaway’s cluster of insurers. The “Oracle of Omaha” made clear he is a fan of Apple’s stock repurchase strategy. Berkshire’s Apple stake is now worth more than $160 billion, comprising 40% of its equity portfolio.
CNBC:
Warren Buffett said he now considers tech giant Apple as one of the four pillars driving Berkshire Hathaway, the conglomerate of mostly old-economy businesses he’s assembled over the last five decades.
In his annual letter to shareholders released on Saturday, the 91-year-old investing legend listed Apple under the heading “Our Four Giants” and even called the company the second-most important after Berkshire’s cluster of insurers…
“Apple – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier,” Buffett said in the letter. “That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job.”
“It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our ‘share’ of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple shares, an act we applaud,” Buffett said.
Berkshire is Apple’s largest shareholder, outside of index and exchange-traded fund providers. The conglomerate has enjoyed regular dividends from the tech giant over the years, averaging about $775 million annually.
MacDailyNews Note: Alongside Berkshire’s cluster of insurers, Buffett also credited his BNSF railroad business and energy BHE segment as his other giants of Berkshire Hathaway.
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