Buffett Should Have Bought Apple Stock Instead of an iPhone

  • Berkshire Hathaway’s chairman, Warren Buffett, has admired Apple (NASDAQ:AAPL) on several occasions. However, he hasn’t added Apple shares since the third quarter of 2018. In contrast, the company has been selling shares.
  • Previously, Warren Buffett hinted that he would by Apple at lower prices. However, the stock has climbed to all-time highs.

Warren Buffett and Apple

Berkshire Hathaway (NYSE:BRK.B) is Apple’s second-largest shareholder. Warren Buffett took the stake in the company in 2016 and gradually added shares until the third quarter of 2018. Since then, Berkshire Hathaway has been selling some of the shares. The company sold some shares in the fourth quarter of 2019. Previously, the company clarified that Buffett hadn’t sold the shares. A different investment manager made the decision.

Berkshire Hathaway

Even if Warren Buffett hasn’t sold Apple shares, he hasn’t brought them either. He surprised everyone by taking a stake in Apple in 2016. Generally, he has stayed away from tech shares. However, he considered Apple to be a consumer company and not a tech company. The legendary value investor left everyone surprised by not adding Apple shares in the fourth quarter of 2018. The stock crashed 30% in the quarter. Berkshire Hathaway brought shares in the previous quarter as well. Buffett chose to stay on the sidelines despite the crash in the stock price.

Buffett hinted in an interview that he would like to buy Apple stock if it falls. Meanwhile, the stock has nearly doubled from those levels.

Warren Buffett brought an iPhone

Earlier this year, Warren Buffett revealed that he brought an iPhone and ditched his long-trusted flip-phone. He even wanted to show a video of himself crushing his old flip phone and warming up to his new smartphone during the company’s annual meeting. Meanwhile, Berkshire Hathaway’s annual meeting was held virtually this year due to the pandemic.

Outlook

Currently, Warren Buffett might have been better off buying Apple shares. Based on Tuesday’s closing prices, Apple has risen 18% for the year, while its market capitalization has more than doubled since the lows in the fourth quarter of 2018. Berkshire Hathaway stock has fallen 13% for the year. The stock has underperformed the S&P 500 (NYSEARCA:SPY). Read Why Warren Buffett and Berkshire Are Underperforming to learn more.