Berkshire Hathaway purchased an additional 75 million shares of Cupertino, Calif.-based Apple last week, raising its total stake to 240 million shares and causing Apple’s stock price to reach its all-time high.
With its latest purchase, Berkshire became Apple’s second-biggest shareholder, following mutual fund company Vanguard. Apple shares are up 8.6 percent this year.
“Apple shares added 3.9 percent, to $183.83, as investors hoped to grab some of the Buffett investment magic,” noted the New York Post. “With the increase, Apple’s market cap crept ever closer to the $1 trillion level, finishing the day at $933 billion.”
“If you look at Apple, I think it earns almost twice as much as the second-most profitable company in the United States,” Berkshire Hathaway’s 87-year-old chief executive officer Warren Buffett told the Post in an interview. “Apple has an extraordinary consumer franchise. You are very, very, very locked in, at least psychologically and mentally, to the product you are using.”
The Post quoted GBH Insights’ Daniel Ives as saying that he believes Apple has put aside persistent and annoying questions about the sales of the iPhone X, and remains firmly on the road to take its place as the planet’s first $1 trillion company by this fall. “Going into this massive three-pronged product cycle, combined with the buyback tailwinds, I think this is a Goldilocks scenario to finally hit that elusive market cap.”
Speaking at the Berkshire Hathaway 2018 annual shareholder meeting on May 5, Buffett said he fully supports Apple’s plan to buy back more of its own shares. He told CNBC, “From our standpoint we would love to see Apple go down in price. We very much approve of them repurchasing shares.”
Only a month ago, Apple announced the launch of the iPhone 8 and iPhone 8 Plus (PRODUCT)RED Special Edition, touted as the new generation of iPhone in a red finish. Both phones sport a glass enclosure, now in red, with a matching aluminum band and black front. Apple also introduced a new (PRODUCT)RED iPhone X Leather Folio.
Buffett said Apple’s domination of the smartphone market and “strong ecosystem” make it an attractive investment.
Indeed, Apple generated a lot of favorable buzz within the industry and among consumers by pointing out that a portion of proceeds for all (PRODUCT)RED purchases go directly to Global Fund HIV/AIDS grants that provide testing, counseling, treatment and prevention programs with a specific focus on eliminating transmission of the virus from mothers to their babies. Since partnering with (RED) in 2006, Apple has donated more than $160 million to the Global Fund, serving as the organization’s largest corporate donor.
By Harold Kosik