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How Big Is Berkshire Hathaway’s New Stake in Apple?

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Portfolio value declines

According to its 13F filings, Berkshire Hathaway’s (BRK-B) new stake in Apple (AAPL) totals $981 million. Apple’s stock has fallen 17% over the past month on declining iPhone revenues. Berkshire Hathaway, known for taking long-term bets under the leadership of Warren Buffett, seems to be banking on Apple’s upcoming product line of TVs and cars over the next few years. The company has also increased stakes in Phillips 66 (PSX), IBM (IBM), Charter Communications (CHTR), and Liberty Media Corporation (LMCK).

Berkshire Hathaway’s portfolio value has declined to $128.5 billion as of March 31, 2016, as compared to $131.8 billion as of December 31, 2015. The company has sold stakes in Procter & Gamble (PG), AT&T (T), and MasterCard (MA).

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Berkshire Hathaway missed analysts’ operating EPS (earning per share) estimate of $2,609 and reported $2,275 in 1Q16. The company also reported operating earnings of $3.7 billion, as compared to $4.2 billion in the corresponding quarter last year. Earnings were mainly impacted by lower operating profits in the insurance and BNSF Railway divisions.

The stock has risen by 2% over the past month and by 0.6% over the past year. By comparison, the SPDR S&P 500 ETF (SPY) has fallen by 0.5% over the past month and by 2.4% over the past year. The stock has a low beta as compared to the broader Market, and it’s relatively less risky for long-term investments.

Investing giant

With a market capitalization of more than $342 billion, Berkshire Hathaway is a holding company whose subsidiaries engage in diverse business activities across sectors. Its subsidiaries operate in several major businesses:

  • insurance and reinsurance
  • freight rail transportation
  • utilities and energy
  • finance
  • manufacturing
  • service and retail

The company’s investments are made and managed primarily by Buffett and Vice Chairman Charles Munger. Buffett purchased Berkshire Hathaway in 1965. At the time, the company was part of the textile business. Since then, the company has gone through several transformations and is now engaged in buying and managing businesses.

Berkshire Hathaway competes with asset managers and insurance players (PFF) including American International Group (AIG), MetLife (MET), and BlackRock (BLK).

In this series, we’ll discuss Berkshire Hathaway’s portfolio changes, sector-wise performance, balance sheet strength, relative performance, and valuation.

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