Financial giant Warren Buffet called Apple one of Berkshire Hathaway’s four “giant pillars” in a letter to shareholders Saturday.
“Apple – our runner-up Giant as measured by its yearend market value – is a different sort of holding,” Buffet’s letter said.
“Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job.”
According to his letter, Berkshire Hathaway owns about $31 million worth of Apple stock, valued in the market at more than $161 billion, giving the investment fund 46% of its $350 billion market value.
In the letter, Buffet said, Apple, along with a “cluster” of insurance companies, and investment in BNSF Railway, which represents a merger of almost 400 freight rail lines over 170 years, moving 10.2 million units throughout the country in 2021.
“Berkshire owns a wide variety of businesses, some in their entirety, some only in part,” the letter said. “The second group largely consists of marketable common stocks of major American companies. Additionally, we own a few non-U.S. equities and participate in several joint ventures or other collaborative activities.”
Reuters said Saturday that Berkshire Hathaway reported record high earnings in the fourth quarter and repurchased $6.9 billion of its own stock.
“Today, internal opportunities deliver far better returns than acquisitions,” Buffett wrote.
Net income for the fund rose 11% to $39.6 billion from $35.4 billion thanks in part to the large gains from Apple, but Buffet said the numbers may be a “misleading” performance measure because it includes gains and losses from stock holdings that does not account for what Berkshire owns, the Reuters report said.
According to the report, Berkshire’s share price rose 30% in 2021, which was above the 29% overall gain of the Standard & Poor’s 500 including dividends and ended two years of underperforming in that index.
Buffet said in his letter that the company has a history of partnering with American businesses.
“Berkshire’s history vividly illustrates the invisible and often unrecognized financial partnership between government and American businesses,” the letter said. “Our tale begins early in 1955, when Berkshire Fine Spinning and Hathaway Manufacturing agreed to merge their businesses. In their requests for shareholder approval, these venerable New England textile companies expressed high hopes for the combination.”
As of Friday’s close, on Wall Street, Berkshire Hathaway stock was up $10.96 to $319.24 per share, with a market capitalization of $713.288 billion, according to Yahoo Finance.
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