Business
Buffett’s Letter to Break Months of Silence Amid Tumult in U.S.
February 25, 2021
February 26, 2022
In his annual letter to shareholders released on Saturday, the 91-year-old investing legend listed Apple under the heading “Our Four Giants” and even called the company the second-most important after Berkshire’s cluster of insurers, thanks to its chief executive.
The “Oracle of Omaha” made clear he is a fan of Cook’s stock repurchase strategy, and how it gives the conglomerate increased ownership of each dollar of the iPhone maker’s earnings without the investor having to lift a finger.
0.1% of Apple’s 2021 earnings is worth $100 million
“Apple – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier,” Buffett said in the letter. “That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job.”
Berkshire began buying Apple stock in 2016 under the influence of Buffett’s investing deputies Todd Combs and Ted Weschler. By mid-2018, the conglomerate accumulated 5% ownership of the iPhone maker, a stake that cost $36 billion. Today, the Apple investment is now worth more than $160 billion, taking up 40% of Berkshire’s equity portfolio.
“BNSF, our third Giant, continues to be the number one artery of American commerce, which makes it an indispensable asset for America as well as for Berkshire,” Buffett said. “BHE has become a utility powerhouse and a leading force in wind, solar and transmission throughout much of the United States.”
Berkshire’s operating earnings surged 45% in the fourth quarter, thanks to a continued rebound in its railroad, utilities, and energy businesses from the pandemic hit.
Buffett bought back a record of $27 billion of Berkshire shares in 2021, as the investor continued to prefer internal opportunities in an increasingly expensive market. Berkshire’s cash pile stood at a near-record $146.7 billion at the end of last year.
SOURCE: CNBC
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