Warren Buffett’s $50 Billion Apple Investment

Warren Buffett’s newest 13F filings were recently released. The Oracle of Omaha’s largest single stock holding continues to be Apple (AAPL) at 23.74% of his portfolio. This is his second large technology company investment. The first came in 2011.

That’s when Warren Buffett began building a position in IBM (IBM). Today, IBM is no longer Berkshire Hathaway’s (BRK-A) portfolio as Warren Buffett came to the conclusion that he had misjudged the company’s future prospects in the cloud computing business due to underestimating the strength of its competitors.

Buffett has famously (prior to 2011) avoided tech stocks. When asked in the late 1990’s if he was (at the time) investing in technology stocks, Warren Buffett said the following:

“The answer is no, and it’s probably unfortunate. I don’t know what that world will look like in 10 years, and I don’t want to play in a game where the other guy has an advantage over me.”

Buffett appears to have studied up on technology stocks since the late 1990’s. It is interesting to note that he only invested in IBM when it:

  1. Traded at a low price-to-earnings multiple
  2. Paid a dividend
  3. Heavily engaged in share buybacks

His investment in Apple follows the same pattern.

Did Buffett Really Invest in Apple?

There’s no doubt that Buffett was behind the IBM investment. It made up nearly 10% of his portfolio at one point.

In Buffett’s 2015 annual report, he gave an update about the control both Todd Combs and Ted Weschler have over Berkshire’s (BRK-B) portfolio:

“Todd (Combs) and Ted Weschler are primarily investment managers – they each handle about $9 billion for us – both of them cheerfully and ably add major value to Berkshire in other ways as well. Hiring these two was one of my best moves.”

Since the initial news of Buffett’s investment in Apple broke, he has confirmed that his investment managers did indeed initiate Berkshire’s position in the company.

However, over time, Buffett has directed much larger purchases in the company as he has become more familiar and comfortable with the business and its future prospects as a “big strong consumer products company.”

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