Overall, 2018 was a record year for US markets in terms of buybacks. Apple (AAPL) only announced a $100 billion buyback. Berkshire Hathaway (BRK-B) repurchased some of its shares last year. However, the size of Berkshire Hathaway’s buybacks was nowhere near Apple’s buyback.
Warren Buffett, Berkshire Hathaway’s chairman, hasn’t been a fan of buybacks. However, Buffett supported Apple’s buybacks. During last year’s shareholder meeting, Buffett said, “And if they are selling for less than their worth and they have the money and they don’t see an acquisition that’s even more attractive, they should buy in their shares.” He also said, “I think it’s extremely hard to find acquisitions that would be accretive to Apple that would be in the $50 billion or $100 billion or $200 billion range.” In the meeting, Buffett admitted to missing out on Amazon (AMZN) and Alphabet (GOOG).
Berkshire Hathaway also had more than $100 billion in cash at the end of the third quarter. Unlike Apple, which is spending most of its cash on buybacks, Buffett might look at deploying the cash into new investments (SPY). The fourth-quarter market sell-off looked like an opportunity for Buffett to deploy some of his cash. We’ll get more details about Berkshire Hathaway’s fourth-quarter investments and exits from the next 13F. Read What’s Warren Buffett’s Plan as Markets Plunge? to see how Buffett could utilize Berkshire Hathaway’s massive cash holdings.
Along with massive cash holdings, Apple and Buffett have another thing in common, which we’ll discuss in the next part.