Even as late as 2020, four years after his investment colossus began to build a sizable stake in the business that produces iPhones, Warren Buffett of Berkshire Hathaway was still using a flip phone. (Photo : by Drew Angerer/Getty Images)
Even as late as 2020, four years after his investment colossus began to build a sizable stake in the business that produces iPhones, Warren Buffett of Berkshire Hathaway was still using a flip phone.
In recent years, he has become one of Apple's leading evangelists. By the end of 2023, Berkshire had around 6% of Apple, or almost 40% of the conglomerate's entire value, a stake valued at $174 billion at the time. This makes the business the second-biggest Apple shareholder, behind only Vanguard, and almost four times larger than Berkshire's second-biggest publicly traded stock position, Bank of America.
This weekend, as the 93-year-old Buffett's ardent supporters and Berkshire investors swarm Omaha for the 2024 annual meeting, Apple is sure to be a major conversation subject. The tech giant said on Thursday that iPhone sales had decreased 10% year over year, resulting in a 4% decrease in overall revenue. However, on Friday, the company saw its greatest day since late 2022, mostly because of a $110 billion stock repurchase plan and higher profits brought on by a developing services sector.
Buffett stated in 2022 that Berkshire's Apple share only cost $31 billion, demonstrating the success of his bet on Apple and CEO Tim Cook. Since the beginning of 2016, his company's investment has increased by over 620%.
Exploring the Moat and Loyalty in the Tech Giant's Ecosystem
Buffett has long had a convincing, non-techie explanation for his love of Apple, despite the fact that he describes himself as a Luddite. He believes the iPhone is a remarkable product that has the potential to keep consumers spending inside the Apple ecosystem since he has witnessed the devotion that Apple fans have for their gadgets. One of his favorite terms to describe his chosen firms is "moat," which he calls it.
The data is on his side. Consumer Intelligence Research Partners found that nine out of ten existing iPhone customers in the United States chose to purchase another iPhone when making a new device, indicating that Apple enjoys 94% customer loyalty.
In addition, Buffett has praised Apple's capacity to distribute billions of dollars to shareholders each year through dividends and share buybacks-a capital allocation tactic that the billionaire investor may have himself to thank for.
In a 2016 interview with The Washington Post, when asked who he looks to for guidance at critical junctures, Apple CEO Tim Cook shared a personal tale about his friendship with Warren Buffett.
Buffett may be questioned this weekend at the shareholder meeting about whether he still sees the same power in the moat, though, given that Apple's business has shrunk in size over the last five quarters and the company is only projecting low single-digit growth in the current quarter. This is especially likely given the regulatory pressures surrounding tech's mega-cap companies.
Buffett reduced his Apple holdings towards the end of last year, but only by around 1%. The stock is down 3.8% in 2024 despite Friday's recovery, while the S&P 500 is up 7.5%.
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