- Warren Buffett has traditionally avoided tech companies but Apple proves he has been wrong.
- Apple is currently leading the Dow in growth this year.
- Currently, Berkshire Hathaway holds stakes in two FAANG stocks.
Warren Buffett has historically avoided tech stocks, making exceptions in only a few cases in his decades of investing experience. Apple (NASDAQ: AAPL) has been one of those exceptions. Now heading into the fourth year of owning the stock, the bet has paid off handsomely for Buffett.
The Berkshire Hathaway (NYSE: BRK) Chairman bought nearly 10 million Apple shares in May 2016. He has since then added to that stake but the value of the initial holding has now more than doubled in value, averaging an annual growth rate of 50%.
Apple up 157% since May 2016
According to an SEC filing made public on May 15, 2016, Berkshire Hathaway acquired 9,811,747 shares of Apple at a price of $108.99. With Monday’s closing price of $279.86, the stock has appreciated by 156.77%.
Since that initial stake, the investing conglomerate has purchased an additional 239,026,932 shares of the iPhone maker. Berkshire Hathaway is currently Apple’s second-biggest institutional shareholder, owning 248,838,679 shares worth nearly $70 billion. This stake accounts for roughly 6% of the tech giant.
Apple is this year’s biggest gainer among the Dow companies. As of Monday, the stock had appreciated 77% since the year began. It beat other tech stocks such as Microsoft (up 53%), IBM (up 18%) and Cisco (up 6%).
Besides the appreciation of the stock, Berkshire Hathaway has also benefited from dividends issued by Apple. Since Berkshire acquired its initial stake, Apple’s dividend per share has ranged between 57 cents and 77 cents per quarter. In the quarter that ended in October, the investing conglomerate raked in nearly $192 million on the over 248 million shares it held.
Is Warren Buffett now a fan of FAANG?
Besides Apple, another FAANG stock that Buffett has placed a bet on is Amazon (NASDAQ: AMZN). Berkshire Hathaway bought shares of the company months after Buffett expressed regret over missing out on Amazon’s stellar growth.
In the decade that’s about to end, Amazon has emerged as one of the best-performing-stocks, having appreciated by over 1,200%.
Per an SEC filing, Berkshire currently owns 537,300 shares of Amazon. This stake is currently worth slightly over $950 million as of Monday’s closing price.
Last modified: September 23, 2020 1:24 PM