In the days leading up to Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) annual meeting in early May 2018, Warren Buffett announced that Berkshire had purchased about 75 million additional shares of Apple (AAPL 0.85%).
This is in addition to Berkshire's already-massive stake, and it results in the company owning more than 240 million shares of the iPhone maker -- about 5% of the total. As of this writing, Apple trades for about $187 per share, which makes Berkshire's Apple investment worth roughly $45 billion.
While Apple is now Berkshire's largest stock investment by far, recent comments by Buffett and his right-hand man, Charlie Munger, indicate that Berkshire could add even more Apple stock to its portfolio.
Image source: The Motley Fool.
Warren Buffett and Charlie Munger wish they had bought more
In a CNBC interview shortly after Berkshire's annual meeting, Warren Buffett said he likes Apple so much that he would love to own all of the company's stock. "We bought about five percent of the company. I'd love to own 100 percent of it," Buffett said.
Charlie Munger, Berkshire's vice chairman and Buffett's longtime business partner, echoed Buffett's viewpoint. "I think we've been a little too restrained," Munger said to CNBC. "I wish we owned more of it."
And, Berkshire has deep pockets right now
It's also important to realize that Berkshire still has a massive stockpile of cash, and that Buffett would love to put more of its cash to work. At the end of the first quarter, Berkshire had about $108 billion in cash and equivalents on its balance sheet, down from about $116 billion at the end of 2017, mainly as a result of the Apple stock purchases.
Buffett recently told CNBC that he'd rather have about $30 billion in cash, so this leaves nearly $80 billion burning a hole in Berkshire's pocket. I wouldn't be at all surprised to see Buffett use a significant portion of this to accumulate even more Apple stock.
Why does Warren Buffett like Apple so much?
There are a few reasons Buffett loves Apple. For starters, the company is massively profitable and has an incredibly loyal customer base. Buffett pointed out after his investment was revealed that Apple is nearly twice as profitable as any other U.S. company.
"We like very much the economics of their activities," Buffett told CNBC.
Buffett is also a big fan of Apple's shareholder-friendly management, especially when it comes to the company's buybacks. Apple is the largest stock repurchase in the S&P 500, and it recently announced a massive $100 billion buyback.
"When I buy Apple, I know that Apple is going to repurchase a lot of shares," Buffett said. "We own about five percent. But I know I don't have to do a thing and probably in a couple of years we'll own six percent without laying out another dollar."
Buffett is a big fan of share repurchases when he feels that a stock is trading for less than its intrinsic value -- and he obviously feels Apple is in that category.
Will Berkshire's Apple stake continue to grow?
Obviously, there's no way to know for sure if Berkshire will buy any more Apple stock, and Warren Buffett is notoriously silent on Berkshire's future investment possibilities.
Having said that, comments from both Buffett and Munger indicate that they still feel Apple is an attractive bargain and that they'd like to boost Berkshire's ownership stake. Apple has evolved into an excellent "Buffett stock," and I wouldn't be at all surprised to see the Oracle of Omaha deploy billions more of Berkshire's cash into the tech giant.
