Once again Warren Buffett's rather casual bets pay off packing up a HUGE profit (over $120 b...
Once again Warren Buffett's rather casual bets pay off packing up a HUGE profit (over $120 billion)
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Warren Buffett's unusual gambling on Apple could end up being one of his most successful investments, grossing more than $ 120 billion on paper as the tech giant broke another record this week, surpassing a market valuation of $ 3 trillion.
Berkshire Hathaway began buying Apple shares in 2016, and in mid-2018 the conglomerate acquired a 5% stake in the iPhone maker for $36 billion.
Fast forward to 2022, Apple's investment is now $160 billion as the massive rally dragged into the new year.
"It is certainly one of the strongest investments Berkshire has made in the past decade," said James Shanahan, Berkshire analyst at Edward Jones.
Aside from Apple's huge price gain, this was also a lucrative gamble for Berkshire. because of their high payments. Berkshire has received regular dividends averaging $775 million per year.
Buffett's aversion to high yield tech stocks is well documented, but the "Oracle of Omaha" has approached the sector over the past decade with the help of investment advocates Todd Combs and Ted Weschler.
Apple's stake in Berkshire now accounts for more than 40% of its stock portfolio, according to InsiderScore.com calculations.
The conglomerate is Apple's largest shareholder, aside from the listed and index fund providers.
The multi-billion-dollar investor has named Apple Berkshire the "third-largest company" after its stakes in insurance and railroads. Buffett previously said the iPhone is a "sticky" product that keeps people in the company's ecosystem.
"It's probably the best business I know in the world," Buffett said in a February 2020 interview with CNBC. “I don't see Apple as a stock. I consider it our third business.
But you probably won't hear Buffett bragging about the winning trade as that is not his style, and he is often quick to point out when stocks estimate that profits are not yet real and are subject to further volatility.
Since 2018, Berkshire has reduced its stake in Apple slightly, and the conglomerate pocketed $11 billion in 2020.
However, due to Apple's buyback programs that reduced the number of its outstanding shares, Berkshire's overall stake in the tech company has grown.
"Berkshire's investment in Apple vividly illustrates the power of buybacks," the company said in its 2020 annual report. "Despite this sale [in 2020], presto!
Berkshire now owns 5.4% of Apple. on why Apple has been continuously buying back its shares, significantly reducing the number of shares in circulation.
"But that's far from all the good news away. Since we also requested Berkshire's actions in two 1/2 years, they now indirectly have 10% more apple and future returns than in July 2018," he said Berkshire
Investing in the tech giant played a critical role in helping the conglomerate weather the 2020 Covid19 crisis as other pillars of its business, including insurance and energy, were hit hard.
