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Guess Which Company Is Buying More Apple Stock Than Berkshire Hathaway

By Daniel Sparks - May 7, 2018 at 1:35PM

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Warren Buffett's Berkshire Hathaway now boasts a stake in Apple worth about $45 billion. But Buffett still isn't the biggest buyer of Apple stock.

Famed investor Warren Buffett has continued his buying spree of Apple (AAPL 2.45%) stock recently. Buffett's Berkshire Hathaway (BRK.B 4.02%) (BRK.A 3.75%) loaded up an astounding 75 million shares of the tech giant during the first calendar quarter of 2018, bringing the conglomerate's total stake in Apple to more than 240 million shares. Buffett's bullishness on Apple has been particularly evident over the last two quarters, with Berkshire accumulating an additional 106.2 million shares during this period.

But there's a surprising twist to all of these Buffett-Apple headlines recently. There's one company buying even more Apple stock that Buffett's Berkshire Hathaway: Apple.

Apple CEO Tim Cook walking on stage at Apple's iPhone 7 launch.

Apple CEO Tim Cook. Image source: Apple.

Buying Apple stock in droves

Buffett's partner, Charlie Munger, commented on Berkshire's purchases of Apple stock in a recent interview with CNBC. "I think we've been a little too restrained," Munger said. "I wish we owned more of it."

Perhaps Berkshire can take a cue from Apple, which hasn't held back in its repurchases of its own stock. Apple significantly ramped up its share repurchases recently, buying back $23.5 billion worth of stock in the second quarter of 2018. This handily beats the $12 billion to $13 billion Buffett spent buying Apple stock during the quarter. Further, Apple's total repurchases over the last six months are also higher than Berkshire's purchases of Apple stock during this period. During this time frame, Apple repurchased over $30 billion worth of its own stock, while Berkshire spent approximately $17 billion to $18 billion on the tech company's shares.

Investors can expect Apple to continue buying back its stock aggressively. Not only did management authorize a new $100 billion share repurchase program alongside its fiscal second-quarter results, but management specifically said in its second-quarter earnings release that it believes its stock "is undervalued." Known to be opportunistic with its repurchases, Apple isn't afraid to spend more on its stock when it believes there's a good opportunity to do so.

Buffett to Apple: Keep repurchasing stock

Though Buffett and Munger wish they had bought more stock, they're pleased with Apple's ongoing repurchases of its stock -- and they hope Apple continues in this manner.

"When I buy Apple, I know that Apple is going to repurchase a lot of shares," Buffett said on CNBC's Squawk Box this weekend. "We own about 5%. But I know I don't have to do a thing and probably in a couple of years we'll own 6% without laying out another dollar. Well, I love the idea of having 5% go to 6%."

Apple's attractiveness as a buy-and-hold investment is no secret. The company's revenue and earnings per share are growing nicely, up 12% and 27% in the trailing 12 months, respectively. Buffett is particularly fond of the company's excellent economics and its management team. Topping it all off, Apple trades at a very conservative valuation of just 19 times earnings.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (2.45%) $3.39
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$417,401.43 (3.75%) $15,101.43
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$278.28 (4.02%) $10.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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