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Here's How Much Warren Buffett Has Made on Apple

By John Ballard - Nov 17, 2019 at 11:53AM

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The tech company now makes up more than 15% of Berkshire Hathaway's book value.

If you're looking for great stock investment ideas, the holdings of Berkshire Hathaway (BRK.A 0.10%) (BRK.B -0.03%) are a good place to look. Warren Buffett's investing prowess has returned Berkshire shareholders 20.5% in compound annual returns since 1965. At that rate, one dollar turns into nearly $25,000 after 53 years. 

All said, you could do a lot worse than follow the Oracle of Omaha's lead, which brings us to Buffett's investment in the iPhone maker. Apple (AAPL 0.17%) is currently the largest stock holding of Berkshire Hathaway, and it is also the largest stock investment Buffett has ever made. But how much has the world's greatest investor made on Apple stock?

A large pile one hundred dollar bills.

Image source: Getty Images.

Apple has nearly doubled in value for Buffett

At the end of 2018, Berkshire Hathaway's cost basis in Apple stock was $36.044 billion. Berkshire owned 254.5 million shares at the end of the third quarter, which would be worth $66.9 billion at Apple's current stock price of $262 per share. Based on the company's most recently reported cost basis in the stock, Berkshire has an unrealized gain of about $30 billion so far. 

Berkshire Hathaway is also earning $784 million in annual dividend income at Apple's current quarterly payout of $0.77 per share. Its quarterly dividend has increased by 48% since the first quarter of 2016 when Berkshire first started buying the stock. With Apple's commitment to returning its massive cash hoard to shareholders through dividends and share repurchases, Berkshire's dividend income from its Apple holding should climb steadily.

Buffett has nearly earned a double on Apple (excluding dividends) in just a few years since the initial investment in 2016. Berkshire first disclosed a small stake in Apple in the first quarter of that year. The 13F filing with the Securities and Exchange Commission dated May 16, 2016, revealed that Berkshire bought 9.8 million shares of Apple worth just over $1 billion in the first quarter of that year.

Buffett later confirmed on CNBC that Apple stock was first purchased by either Todd Combs or Ted Weschler -- two investment managers at Berkshire who oversee a small portion of the company's stock holdings. Once Buffett looked at Apple, he liked what he saw and proceeded to accumulate about $35 billion worth of the stock between 2016 and 2018. 

Buffett gets hip with tech

Apple is not the first tech stock that has popped up on Buffett's radar. He invested $10.8 billion in IBM (IBM -0.91%) stock in 2011. But he later sold out, because IBM failed to deliver the growth that he was expecting. 

During a CNBC interview in 2017, Buffett said he no longer valued IBM as highly as he once did. He also said, "I feel more certain about the future [of Apple] than when I look at IBM." 

What is certain about Apple? In another interview with CNBC, he said, "Apple strikes me as having a sticky product, and an enormously useful product to people that use it." 

At the 2019 Berkshire Hathaway shareholder meeting in May, a question was asked about Buffett's current thinking on Apple since it is such a large holding for the company. Buffett's sidekick (aka vice chairman of Berkshire Hathaway) Charlie Munger offered his usual short but spot-on response that captures the inherent value of the Apple brand: "Well, in my family, the people who have Apple phones, it's the last thing they'll give up." 

Although it is a tech company and must invest heavily to stay up with competitors, it's clear that both Buffett and Munger look at Apple as having a pull on consumers similar to Coca-Cola (KO 1.63%) or See's Candies -- two of Buffett's best known and most successful investments in consumer goods companies. 

Apple makes fancy devices, but it's also a very successful consumer brand that people all over the world are attached to. It was the tight connection that people have with the product that ultimately drove Buffett to buy the stock on behalf of Berkshire Hathaway. 

Buffett refers to that connection with Apple devices as "indispensable" in this digital age. That status could always change, because you never know what can happen in the technology world. But given Coca-Cola's current problems dealing with the sugar backlash, you could make the argument that Apple has a tighter connection with consumers than Coke ever did.

Will Apple be a perennial holding for Berkshire like the famed investment in Coca-Cola? Only time will tell. But so far, so good for Berkshire's $36 billion investment in the Mac maker.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.59 (0.17%) $0.24
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$456,500.00 (0.10%) $468.99
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$304.05 (-0.03%) $0.10
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$128.48 (-0.91%) $-1.18
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$60.98 (1.63%) $0.98

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

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