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Warren Buffett Can't Get Enough of Apple

By Evan Niu, CFA - Updated May 8, 2018 at 3:23PM

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The Oracle of Omaha and the Mac maker bought approximately 212 million shares combined in the first quarter.

Famed investor Warren Buffett loves Apple (AAPL 0.00%) stock. The Oracle of Omaha has been steadily increasing Berkshire Hathaway's (BRK.A 0.07%) (BRK.B 0.04%) stake over the past couple of years, and it sounds like Buffett has no intention of putting the brakes on buying Apple shares. Berkshire hosted its annual meeting over the weekend, and as usual, Buffett offered up some sage advice to investors looking to emulate his returns.

This morning, Buffett even went as far as to say that he'd like to own all of Apple if he could.

Side view of iPhone X

Image source: Apple.

Buffett wants the whole thing

"We bought about 5% of the company. I'd love to own 100% of it," Buffett said about the Mac maker in an interview with CNBC. "That's the test: Would you like to own 100% of a company?" Of course, owning 100% of Apple is far too tall of an order to fill, with shares tapping all-time highs following Buffett's endorsement and pegging Apple's market cap at around $900 billion. Not even Warren Buffett has that kind of money at his disposal.

For reference, here's Berkshire's Apple position ever since initially buying shares in back in early 2016.

Chart showing Berkshire Hathaway increasing its Apple position over time

Data source: SEC filings. Chart by author.

Berkshire started off the year with 165.3 million Apple shares, and Buffett has confirmed that the company has bought an additional 75 million shares in the first quarter of 2018. That would bring Berkshire's position up to approximately 240 million shares, approaching the 5% threshold that Buffett was referring to. Apple had 4.92 billion shares outstanding at the end of the first quarter. Berkshire has not yet filed its Form 13F for the first quarter officially detailing its holdings, but its 10-Q filed this morning pegs the value of its Apple holdings at $40.7 billion.

Buffett loves the buybacks

Once upon a time, Buffett suggested to Steve Jobs that Apple should use its growing cash position for share buybacks, but unfortunately, Jobs didn't heed his advice. Things have changed quite a bit in the years since, and under CEO Tim Cook's leadership the company has been buying back stock hand over first, repurchasing a whopping $200 billion in stock since 2012. That includes $23.5 billion repurchased last quarter alone, thanks in large part to tax reform.

Buffett also espoused the benefits of the buyback program, describing the possibility that "in a couple of years we'll own 6% without laying out another dollar" since Apple repurchases shares so aggressively, announcing a new $100 billion repurchase authorization earlier this month. The subsequent result is meaningful earnings accretion of all those profits over time -- a benefit that all long-term shareholders will enjoy.

That $23.5 billion that Apple spent buying back its shares in open-market transactions was enough for about 137 million shares. Between Apple's and Buffett's buying activities, that's approximately 212 million shares being bought during the first quarter.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$417,700.00 (0.07%) $298.56
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$278.40 (0.04%) $0.12
Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (0.00%) $0.00

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