Warren Buffett Buys Even More Apple Shares, Moves Into Top 5 Holders

Berkshire Hathaway chairman Warren Buffett released his annual letter to shareholders Saturday morning, expressing confidence in the market system, the future of the USA economy, and blasting hedge funds for high fees and poor results. Berkshire's revenue ($224 billion), profits ($24 billion) and market value ($421 billion) all rank among the top five in the U.S. Notably though, Buffet praises the repurchases at some of Berkshire's equity holdings (calling out Bank of America by name) writing "we very much like this behavior because we believe the repurchased shares have in most cases been underpriced". "Apple strikes me as having quite a sticky product".

It was hedge fund managers and protégés of Buffett, Todd Combs and Ted Weschler who took the decision to invest heavily in Apple.

Buffett has said he believes most stock investors are better off with low-priced index funds than paying higher fees to managers who often underperform.

'Third, most managers will nevertheless seek new money because of their personal equation - namely, the more funds they have under management, the more their fees'. Even though Buffett won't discuss what he might buy, Smead said he could have talked more about what he doesn't like in the market today.

As you might imagine, Buffett, the chairman of Berkshire Hathaway, gets asked for investment advice (and general life advice) from time to time. Last year's production, Buffett wrote, was a success in all respects, registering 1.1 million unique visits in real-time viewing and 11.5 million more in replays.

Berkshire on Saturday also said fourth-quarter profit rose 15 percent from a year earlier, as gains from investments and derivatives offset lower profit from the BNSF railroad and other units. That makes Buffett, who for most of his career has shunned tech stocks, Apple's fifth largest outside investor, and probably its most active.

Berkshire started buying shares of Apple in mid-2016, and had 61 million shares by the end of the year. The company reported a net profit of $6.3 billion in the October-December period, a gain of almost 15 per cent from a year ago.

Warren Buffett has revealed that Berkshire Hathaway's stake in Apple is twice as large as previously disclosed at more than $18 billion (€17 billion) but said that the iPhone maker's share price is now so high it is no longer an attractive investment. Altogether, he realized about $37.5 million from the sale of Apple shares in February. Smead said the 86-year-old Buffett and his investing partner, 93-year-old Charlie Munger, seem concerned about their legacies and how Berkshire is perceived. Meanwhile, index funds have been on a tear.

  • Eleanor Harrison