Legendary investor Warren Buffett doesn't easily fall for trends or fads. That's why Wall Street took notice when the legendary investor started pouring billions into Apple Inc. His firm, Berkshire Hathaway Inc., first acquired Apple stock in 2016. Since then, that investment has ballooned to $110 billion, constituting nearly 40% of the firm's equity portfolio.
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Some financial experts, like have like professor Aswath Damodaran in his "Investing the Templeton Way" podcast, have questioned Buffett's traditional investment philosophy given that Apple now takes up a large portion of Berkshire's portfolio. Buffett's investment strategy is far from typical. His firm has a diverse range of businesses from railroads to candy companies.
For Buffett, Apple is not just another business. At the 2023 Berkshire Hathaway annual shareholders meeting in May, Buffett emphasized that it is "a better business than any we own." He clarified that while Berkshire Hathaway has invested a considerable amount in Apple, it still doesn't surpass its investment in railroads. He believes railroads are a good business but not in the same league as Apple.
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Buffett sees the unique place that Apple holds in the lives of its consumers as the key to understanding his investment. He mentioned the incredible loyalty Apple commands, pointing out that many people might spend $35,000 on a second car but would opt to keep their iPhone instead. According to Buffett, "If they had to give up a second car or give up their iPhone, they'd give up their second car."
The iPhone has become indispensable in everyday life, offering a host of functionalities from communication and entertainment to health monitoring and financial transactions. This utility is a powerful testament to the brand's strength and the product's inherent usefulness, adding weight to Buffett's confidence in the company.
In addition to creating an impactful product, Apple has cultivated almost unparalleled brand loyalty. Buffett acknowledges this, stating that every increase in Apple's market share adds substantially to Berkshire Hathaway's earnings. Each increase in Apple's market share is like adding "$100 million to our earnings," Buffett said.
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This article Warren Buffett Says Apple Is Better Than Any Businesses Berkshire Owns — Unmatched Brand Loyalty Proven As Consumers Would Give Up A Second Car For An iPhone originally appeared on Benzinga.com
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