Since famed investor Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) (NYSE:BRK-A) began buying Apple (NASDAQ:AAPL) stock in early 2016, the conglomerate has continued to load up on shares. Berkshire has purchased so many Apple shares that the tech giant became Berkshire’s largest equity holding last year.
But Buffett & Co. apparently weren’t done buying Apple stock when Berkshire revealed it had accumulated a whopping 165.3 million shares of the company by the end of 2017. On Thursday evening, Buffett said in an interview with CNBC that Berkshire had purchased an additional 75 million shares of Apple during the first quarter, just as analysts were worrying about the near-term trajectory of iPhone sales.
In addition, Buffett chimed in with some wisdom on why investors shouldn’t be wasting their time obsessing over quarterly iPhone X sales. Here’s a closer look at Berkshire’s big bet on Apple.
Apple’s $43 billion bet on Apple
It’s difficult to comprehend just how enormous Berkshire’s bet on Apple is until you start talking in dollar figures. So, consider this: After adding 31.2 million Apple shares during the fourth quarter of 2017, the value of Berkshire’s Apple stock was worth more than $28 billion. But Berkshire’s addition of 75 million more Apple shares in Q1, paired with the recent jump in Apple’s stock price, brings the value of Berkshire’s holdings in the tech giant (now at more than 240 million shares) to an astounding $43 billion.
Highlighting what a significant bet this is for Berkshire, consider that this position is worth about $20 billion more than the company’s second-largest equity position in Wells Fargo. At the time of this writing, Berkshire’s Apple stake is worth more than Berkshire’s second- and third-largest holdings (Wells Fargo and Bank of America) combined.
And here’s one last data point for you: The value of Berkshire’s Apple stock is now equal to an incredible 9% of Berkshire’s entire market capitalization.
Why Berkshire was buying Apple stock
Along with revealing Berkshire’s significantly larger stake in Apple on Thursday evening, Buffett shared his take on the recent intense scrutiny on iPhone sales as supply chain rumors — and even earnings reports from Apple suppliers — suggested iPhone X demand could be worse than expected.
“We don’t own it for the next quarter. … You read all the analyst reports and everybody talks about what it’s going to do next year,” Buffett said. “Nobody buys a farm based on whether they think it’s going to rain next year or not, they buy it because they think it’s a good investment over 10 or 20 years.”
Instead, investors should zoom out, Buffett advised.
The relevant question when you’re thinking about buying part of a business, which is what you’re doing when you’re buying a stock, is “Where’s it going to be in 10 or 20 years?” … The idea that you’re going to spend loads of time trying to guess how many iPhone X … are going to be sold in a given three-month period totally misses the point.
For now, Buffett’s view of Apple stock has helped him create value for Berkshire shareholders. Apple shares jumped sharply after the company’s fiscal second-quarter report, when Apple reported accelerating revenue and earnings-per-share growth, as well as provided strong guidance for more double-digit year-over-year revenue growth in its fiscal third quarter.
Year to date, Apple stock is up more than 7%, trouncing the S&P 500‘s 1.7% pullback during this same period.
Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.