Why Berkshire Hathaway’s Warren Buffett loves Apple so much

Berkshire Hathaway’s Warren Buffett, the “Oracle of Omaha,” is one of the most affluent investors of all time. Berkshire’s investment portfolio holds roughly 40% of its value (about $128 billion) in just one stock: Apple. So, why does Buffett love Apple so much?

Apple logo

Luke Meindl for The Motley Fool:

Apple has one of the most resilient businesses in the world and this is helping it shine today… For the full fiscal year 2022, analysts are modeling a top line of $394.2 billion and earnings of $6.15 a share, translating to 8% and 10% growth year over year, respectively. Apple’s popular product business and growing services segment position the technology giant well.

Buffett once said, “Cash is to a business as oxygen is to an individual.” Apple certainly embodies that. The company has a cash position of $28.1 billion and is practically a money-printing machine. In the past 12 months, it generated $105.8 billion in free cash flow (FCF), and the three-year levered FCF compound annual growth rate is 13%… A sizable cash position offers peak stability and financial flexibility, two key traits that Buffett looks for in a stock.

The power of the brand is often a key driver of a company’s success. According to Forbes, Apple is the most valuable brand in the world… Apple locks users into its ecosystem and has a strong economic moat. It’s created a strong love for its products and routinely introduces new ones… For Buffett, an investor who seeks out companies with wide and long-lasting moats, Apple is the perfect stock to sit atop the Berkshire portfolio.

MacDailyNews Take: As Buffet said:

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. And, remember that the stock market is a manic depressive.

Own it. Don’t trade it. Don’t panic sell, rather take advantage of the discounts that panic sellers periodically provide.

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1 Comment

  1. I really appreciate those foolish Apple panic-sellers. They really help Apple’s buyback strategy as they allow Apple to repurchase shares at a much lower price. Those panic sellers are also helping me as I continue to hold onto my shares and they become more valuable. I often wonder if Apple realized that there would always be plenty of panic-sellers and that’s why Apple continues to boost buyback plan cash. I’ll never quite understand the panic-seller’s mentality but I suppose they have their reasons. Maybe it’s margin calls that cause them to simply dump their shares. I really enjoy seeing outstanding shares decrease over time. It may be even better than receiving higher dividends.

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