To what extent can a visionary investment make blood? One or two can be glimpsed from billionaire investor Buffett’s investment in technology giant Apple.
Buffett, the chairman of Berkshire Hathaway, who used to dislike investing in technology stocks, now holds more than 40% of his stock portfolio in Apple.
With Apple’s market value exceeding US$3 trillion this week, Buffett’s unexpected bet may become one of his most successful investments, with current book earnings of more than US$120 billion.
Berkshire Hathaway started buying Apple’s stock in 2016. By mid-2018, it had accumulatively held 5% of Apple’s shares and spent US$36 billion. With the strong wave of Apple in early 2022, the rise in Apple’s holdings is now worth US$162 billion.
In five years, the “stock god” Buffett has made a lot of money
In addition to the sharp rise in Apple’s stock price, Berkshire Hathaway’s huge dividend has also made it a “significant bet.” Berkshire enjoys regular dividends, averaging about $775 million per year.
It has to be said that Buffett’s change in investment strategy is very lucky to step on the rise of Apple’s stock price. In the vast sea of stocks, although the entire US stock technology stocks fell crazily in 2018, the “stock god” Buffett once again proved his unique investment vision. Even Berkshire analyst James Shanahan said:
There is no doubt that this is one of Berkshire’s strongest investments in the past 10 years.
Apple is Berkshire’s third largest industry
Buffett called Apple the “third-largest industry” of Berkshire Hathaway, second only to insurance and railroads. Buffett has previously stated that the iPhone is a “sticky” product that keeps people in the company’s ecosystem.
Buffett said in an interview with CNBC in 2020:
Apple may be the best company in the world that I know. I don’t think it is a stock. I think it is our third business.
It is Buffett’s unique investment in Apple that has played a key role in helping Berkshire Hathaway weather the 2020 COVID-19 crisis. The company’s “other two pillars” (insurance and railways) are both in The epidemic was hit hard.
However, Buffett has realized some real profits over the years. Since 2018, Berkshire has been slightly reducing its holdings in Apple, and the group received $11 billion in revenue in 2020. However, due to Apple’s repurchase program reducing the number of outstanding shares, Berkshire’s overall holdings in the technology company increased.
Can investors who hold Apple stocks still make money?
In less than four years, Apple’s market value has tripled. Analysts believe that its stock price still has a lot of room to rise.
Apple’s revenue for all product categories in the fourth quarter achieved annual growth, with revenue increasing by 29% year-on-year. Although the iPhone is still the biggest sales driver, Apple’s service business grew by 25.6% year on year, with revenue exceeding $18 billion in the quarter.
In December last year, Morgan Stanley raised Apple’s target price from US$164 to US$200 and maintained a rating equivalent to a buy, because new products such as virtual reality and augmented reality headsets have not yet been included in Apple’s stock price.
Morgan Stanley also predicts that Apple’s fourth-quarter revenue will far exceed estimates because Apple will ship 83 million units in the fourth quarter, 3 million more than expected.
In the overnight U.S. stock market, Apple first continued its gains and opened sharply higher, rising to a maximum of 182.9 US dollars in the intraday market, and finally closing down by 1.27% to 179.7 US dollars.