Every year Warren Buffett, one of the richest men in the world and CEO of Berkshire Hathaway, writes an open letter to shareholders. Over the course of six decades, these letters have become a fixture for investors around the world as they provide invaluable insights into Buffett-thinking and investment strategy.
In the last letter Buffett first of all emphasizes that “whatever our form of ownership, our goal is to have significant investments in companies with lasting economic benefits and a first-class CEO. We own stocks based on our expectations of their long-term corporate performance and not because we see them as vehicles for timely market movements. This point is crucial: Charlie (the vice president of Berkshire, Charlie Munger, ed) and I are not stock-pickers; we are business-pickers “.
Apple treasure
Buffett then specified that in his portfolio of shares, the stake in Apple is 5.55%, compared to 5.39% a year earlier. “It seems like a small thing but consider that every 0.1% of Apple’s earnings in 2021 amount to $ 100 million. We didn’t spend any Berkshire funds to get our accrual. The buybacks of Apple did the job, ”says the Ohama Oracle.
Notably Buffett said he now views tech giant Apple as one of the four pillars driving Berkshire Hathaway. “Tim Cook, the brilliant CEO of Apple, regards users of Apple products as his first love, but all other groups also benefit from Tim’s managerial touch,” the letter reads.
The Oracle of Omaha has made it clear that they are a fans of Apple’s share buyback strategy, and how it gives the conglomerate more ownership of every dollar of the iPhone maker’s earnings without the investor having to lift a finger. Berkshire began buying Apple stock in 2016 under the influence of Buffett’s deputy investors Todd Combs and Ted Weschler.
Love born in 2018
Berkshire began buying Apple stock in 2016. A mid 2018, Berkshire went on to amass 5% ownership of the iPhone maker, a stake that cost $ 36 billion. Today, the investment in Apple is worth more than 160 billion dollars, occupying the 40% of Berkshire’s equity portfolio.
Ma not just Apple. In the letter Buffett also dwelt on “long-term interest rates that are low push the prices of all productive investments upwards, be it stocks, apartments, farms, oil wells, whatever. Other factors also influence valuations, but interest rates will always be importanti”.