Buffett Singles Out Apple Among Top Three Valuable Holdings

(Bloomberg) -- Berkshire Hathaway Inc.'s holding in Apple Inc. has become so valuable that Warren Buffett eyes it on an equal footing to the sprawling railroad business he spent a decade building.

Buffett has amassed $120 billion worth of Apple stock since his conglomerate started purchases in late 2016, while only spending $31.1 billion building that stake. That places it among his top three most valuable assets, alongside his insurers and BNSF, the American railroad purchase he completed in 2010, he said in his annual letter on Saturday.

Buffett had traditionally shied away from technology stocks, saying he didn't invest in companies he didn't understand. But Berkshire, with help from investing deputies including Todd Combs and Ted Weschler, has come around in recent years, adding shares in Amazon.com Inc., Snowflake Inc., and more recently, accumulating an $8.6 billion holding in Verizon Communications Inc.

“Berkshire arrived very late to the Apple party and it has still worked out,” Cathy Seifert, an analyst at CFRA Research, said in a phone interview. “I don't know what it says more about -- Apple's resiliency or Berkshire's deal-making -- when an iconic technology name is now considered a valued franchise within Berkshire.”

Berkshire ramped up its Apple purchases through 2018, and has since been trimming that stake, allowing the company to pocket $11 billion on the sales in 2020. But thanks to Apple's own repurchases, which shrank the number of its outstanding shares, Berkshire's stake in the iPhone maker grew.

“Despite that sale – voila! – Berkshire now owns 5.4% of Apple,” Buffett said. “That increase was costless to us, coming about because Apple has continuously repurchased its shares,” he said.

And there was more good news, according to Buffett. Because Berkshire also repurchased its own shares in the past 2 1/2 years, Berkshire investors now indirectly own “a full 10% more of Apple's assets and future earnings than you did in July 2018,” he said. “Berkshire's investment in Apple vividly illustrates the power of repurchases,” said Buffett.

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