In a recent 13F filing with the SEC, Berkshire Hathaway (BRK.A -1.12%) (BRK.B -0.86%) revealed that it had purchased even more shares of Apple (AAPL 0.01%) in the most recent quarter, increasing its stake by 3.9 million shares to 134.1 million. That is interesting, since the stock had already appreciated roughly 50% since Buffett & Co. began buying about a year ago. As a devout value investor, it suggests Buffett and his Berkshire Hathaway lieutenants think Apple is still a great buy, even at these levels. Here are the likely reasons Buffett has kept buying the iPhone giant.

Pricing power

This summer, Apple unveiled the iPhone X, its 10th-anniversary smartphone, complete with all sorts of bells and whistles including facial recognition, wireless charging, and, of course, animojis. For the privilege of owning the latest and greatest iPhone, customers will have to pay $999, though many will pay even more if they choose a monthly payment plan or opt for more storage. 

arms frantically grab piles of dollar bills on a table

Image source: Getty Images.

That's a huge increase over the $600-$700 one had to pay for the iPhone 7s, yet Apple CEO Tim Cook has said the company is seeing "off the charts"  demand for the X. It's rare to find a company that can routinely raise prices and not lose customers. That Apple can do it means its brand equity is as strong as ever.

Buffett has long touted pricing power (as well as low capital spending requirements) as a key attribute he looks for in long-term holdings, because the ability to raise prices without losing customers will insulate a stock from inflationary pressures. That's why Apple's pricing power fits the Buffett bill.

Toll-taking ecosystem

In addition to pricing power, Buffett has also pointed to Apple's toll-road qualities. While many had viewed Apple as just a hardware company, Buffett (and I, and many others) likely views Apple as an ecosystem.

If you own an iPhone, switching away to a smartphone running Android would not only entail breaking the psychological barrier of "trading down" for something you use everyday, but it would also require switching all your photos and documents out of iCloud, turning off your Apple Music subscription, or having to rebuy all the applications you've bought from the App Store. In other words, it would be a huge effort to switch.

On the other hand, if you keep your iPhone, and keep buying new ones, you'll likely continue to listen to Apple Music, buy additional applications from the App Store (of which Apple gets a cut), perhaps use Apple Pay, and continue to buy more and more storage as you accumulate more digital assets. That's why Apple's services segment grew a whopping 23% in fiscal 2017. While services still only make up about 13% of revenue, that number is sure to grow over time, and the recurring subscription revenue within the services segment is more consistent than the more cyclical revenue from iPhone.

Cash and valuation are kings

Finally, Buffett loves cash above all else. He usually values stocks based on discounted cash flows and prefers stocks with pristine balance sheets. His partner Charlie Munger once reportedly quipped that the main ways smart people get in financial trouble is through "ladies, liquor, and leverage."

The love of cash and a clean balance sheet almost certainly attracts Buffett to Apple, with its massive $270 billion cash hoard. Of course, Apple also has almost $104 billion in long-term debt, which it has used to fund huge buybacks and a rising dividend, as it keeps much of its cash overseas to avoid repatriation taxes.

Buffett himself always likes to have at least $20 billion in cash on Berkshire's balance sheet, just in case of a rainy day, and the love of a big cash buffer is likely another reason why Buffett still loves Apple.

At the same time, Apple trades at just 19.5 times trailing earnings, but only about 14.5 times forward, estimated earnings. That is not terribly expensive, especially in this high-priced market, and especially not in the extremely high-priced tech sector. 

With a demonstrated pricing power, a strengthening ecosystem with growing services revenue, a huge cash balance, and still reasonable valuation, it's no wonder that Buffett and Berkshire Hathaway still love Apple stock.