Apple’s (AAPL) market capitalization surged past the $1 trillion mark after its earnings beat analysts’ estimates. Apple was Berkshire Hathaway’s (BRK-B) biggest holding at the end of the fourth quarter. Berkshire has been adding to its position in Apple since it took a stake in 2016. However, it did sell some shares in the fourth quarter, which surprised markets.
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Warren Buffett said that the shares were sold by a different investment manager. Ted Weschler and Todd Combs are two of the other investment managers at Berkshire Hathaway. Nonetheless, Buffett not adding more Apple shares in Q4 was surprising for two reasons. First, the stock tumbled more than 30% in the quarter, and its market capitalization fell below $700 billion for the first time since 2017. Secondly, given Berkshire’s massive cash pile, markets expected Buffett to add more Apple shares.
In a CNBC interview, Buffett said that Berkshire Hathaway’s average buying price for Apple “is about $141 or something like that.” In response to a question on whether he would buy Apple “at $160 or something,” Buffett replied in the negative. He also said, “the lower it goes, the better I like it, obviously.” A fall in Apple stock would have enabled Berkshire to buy more shares. However, after the sharp fall in January, when Apple cited China’s slowdown while lowering its guidance, the stock has looked strong and is outperforming the broader markets (SPY) (QQQ) so far in 2019.
From Berkshire’s perspective, while the company might not be able to buy Apple at the price point Buffett was targeting, the sharp rise in Apple would still boost Berkshire’s portfolio value.