As of September 30th, Warren Buffett’s Berkshire Hathaway had 49% of its $318 billion equity securities portfolio invested in Apple.
The prevailing consensus is that Buffett was not the original decision-maker when Berkshire first bought shares in 2016. That distinction probably lies with his co-investment managers Todd Combs and Ted Weschler.
But there can be no question that Buffett has a high conviction now about Apple, based on Berkshire’s huge asset allocation. As Buffett said earlier this year: “Apple is different than the other businesses we own. It just happens to be a better business.”
Buffett sees a durable competitive advantage as the most important quality a business can possess, and Apple has that in spades… Buffett called attention to those qualities during a CNBC interview earlier this year: “If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it.” Not many companies have a product that is so highly prized among consumers.
[Apple] is the largest smartphone manufacturer in the U.S. (55% market share in the third quarter) and the second-largest worldwide (16% market share in the third quarter). Apple is also the fourth-largest personal computer (PC) manufacturer, and it leads the market in tablets and smartwatches.
That creates a path to mid-single-digit growth in device revenue in the coming years as the broader consumer electronics market is expected to grow at 6.6% annually through 2030, according to Grand View Research… But Apple has an installed base north of 2 billion active devices, which creates a monetization opportunity via services… That creates a path to low-double-digit growth in services revenue in the coming years…
MacDailyNews Take: You can do worse, far worse, than following Warren Buffett’s investment advice.
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