Warren Buffett, the legendary investor, has moved away from his statement, “If there’s lots of technology, we won’t understand it,” and going for more and more Apple shares.
By the end of Q3, Berkshire had 15.2 million shares, but by the end of Q4, it nearly quadrupled to 57.4 million amounting to $7.74 billion. Post the quarter four, Buffett’s Berkshire Hathaway had added a lot more and today it owns 133 million shares, which amount to nearly $17 billion.
The firm’s holding in Apple is nearly 2.5% today and it is the third biggest holding of Berkshire after Kraft Heinz and Wells Fargo. Although Buffett always shied away from technological shares with IBM shares being an exception, he has always maintained that one should buy ‘great businesses at fair prices than fair businesses on the cheap.’
The question that comes to everyone’s mind is, “What is that is prompting Buffett to come out of his comfort zone and invest heavily in the technological company?” Is it the influence of Combs or Weschler both of whom are the probable candidates to succeed as chief investment officer in Berkshire after Buffet?
When this question was put forward to Buffett by CNBC’s Becky Quick, he answered, “Because I liked it.” He said, “We’ve spent a lot of money since Dec. 31. Apple’s share price has shot up since then. It’s at a price different than I would buy it now.”
On being prodded further by Becky, Buffett said that he realised that Apple is a consumer product maker and most of its customers are very loyal to the innovative products that Apple brings in. Thus, if a consumer once buys ‘an Apple’, he keeps coming back for more. Buffett still uses his old cell phone, which is a Samsung model and pointing at it, he joked that there is still a vast, untapped market left of 86-year-old guys who don’t own Apple products yet.
In this year alone, the share price of Apple has gone up by 18 percent, which is huge and it is one of the best performing scripts at the Dow. Dow itself is having a run of life with 12 straight high closings. The current worth of Apple is $720 billion, while Berkshire Hathaway is worth $420 billion as on date. Buffett is hopeful that Apple will touch the $1 trillion mark soon and obviously much before his Berkshire Hathaway.