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Following Warren Buffett Might Not Always Yield Profits


Dec. 17 2018, Updated 9:34 a.m. ET

Warren Buffett

Warren Buffett, Berkshire Hathaway’s (BRK-B) chair, is known for his value investing. The legendary investor who made his fortune through investing is widely followed by investors. Buffett is a long-term investor and sees companies as businesses and not merely stocks.

Buffett prefers to hold large stakes in companies and likes companies with moats. In this series, we’ll look at a couple of examples where following Warren Buffett might not have yielded profits for investors (SPY). To be sure, Buffett has himself admitted to making mistakes. For example, in this year’s annual shareholder meeting, Buffett pointed out that he missed out on Amazon (AMZN) and Google, which is now Alphabet (GOOG).

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Meanwhile, Apple (AAPL) is Berkshire’s largest holding, according to the latest filing. In the third quarter, the company added ~522,902 Apple shares. Berkshire Hathaway’s stake value in Apple rose 22.2% sequentially. Among the FAANG (Facebook, Amazon, Apple, Netflix, and Google) pack, Apple has looked quite vulnerable. Apple’s iPhone sales were lower-than-expected in the last quarter. The company also announced that it would no longer report unit sales numbers. One wouldn’t expect the company to take this measure if the outlook for its unit sales were strong. To be sure, a quarter’s performance doesn’t really drive investment decisions for long-term investors like Buffett. However, it looks like a prolonged slowdown for Apple. We’ll discuss this in the next article.


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