Berkshire Hathaway’s annual letter to shareholders has praised Apple, using the iPhone maker as a demonstration of how share buybacks can be a good thing for investors. In previous announcements, Berkshire Hathaway saw Apple’s stock grow despite sales.
Berkshire Hathaway saw Apple’s stock grow
Each year, Warren Buffett’s Berkshire Hathaway writes a letter to shareholders, describing their investments and events during the past 12 months. In the 2020 letter published Saturday, the investment firm wrote extensively about its ownership in Apple.
The company is known for its major investments over the years, and counts Apple as one of its most valuable assets. While the company’s main asset is its property and casualty insurance operation, Apple is not far behind.
“Our second and third most valuable assets – it’s pretty much a decommissioned right now – are Berkshire’s 100% ownership of BNSF, America’s largest railroad measured by freight volume, and our 5th ownership, 4% of Apple ”, writes the signature.
Berkshire Hathaway is eager to buy back shares, in the sense that its own shares “must be bought back at any price.” To demonstrate its point of view, the company uses its investment in Apple to demonstrate the power of buybacks.
“We started buying Apple shares at the end of 2016 and at the beginning of July 2018, we owned just over one billion Apple shares (adjusted divided),” the firm begins. “When we finished our purchases in mid-2018, Berkshire’s general account owned 5.2% of Apple.”
The cost of participation was $ 36 billion, the letter reveals, and it enjoys regular dividends that average about $ 775 million annually. It also made an additional $ 11 billion by selling a “small slice” in 2020.