Apple

Origin of Relationship

Berkshire Hathaway began purchasing shares of Apple Inc. in 2016 (initially driven by one of Buffett's investment lieutenants) and continued to amass a massive position under Warren Buffett's direction over the following years.

Major Milestones

• 2016: Berkshire initiates a position in Apple.
• 2018: Apple becomes Berkshire's largest equity holding, representing roughly 5.4% ownership of the company. Buffett heavily defends the investment at the 2018 Annual Meeting, explaining that the thesis was based on consumer behavior and the "stickiness" of the Apple ecosystem, rather than predicting tech cycles. He also effusively praised Apple's stock repurchase program, noting that Berkshire's ownership increases automatically as Apple buys back its own shares.
• 2021: Designated as the "Runner-up Giant" (Giant 2) in the "Four Giants" framework. Berkshire's ownership increased to 5.55% purely through Apple's share repurchases, with a cost basis of $31 billion and a year-end value of $161 billion. Apple earned $100 billion in 2021; Berkshire's share was $5.6 billion. Tim Cook praised as a "brilliant" CEO.

Strategic Importance

Apple represents a significant evolution in Buffett's investment strategy, seemingly breaking his long-standing rule of avoiding technology companies. However, Buffett views Apple not merely as a tech company, but as a consumer products company with an incredibly sticky ecosystem and unmatched brand loyalty—a modern realization of the The Moat. Furthermore, Apple's massive share repurchase program perfectly aligns with Berkshire's philosophy of capital allocation, allowing Berkshire to increase its stake in a wonderful business without deploying additional capital.

🔗 Connections

• Concepts: The Moat, Share Repurchases, Circle of Competence
• Sources: 2018 Letter, 2018 Meeting