Warren Buffett has heaped praise upon Apple, despite investing billions of dollars in the iPhone maker.
The investor called the iPhone “one of greatest products” and possibly “the greatest product of all times”.
He said that the technology giant was a “better business” than American Express and Coca-Cola – two of Berkshire Hathaway’s oldest and biggest investments.
The Berkshire Hathaway CEO and Chairman made the comments at the company’s annual meeting to a crowd of approximately 10,000 shareholders.
The company announced earlier that its holdings in Apple were down to $135 billion from $174 billion by the end of the last year. This means that it sold around 13 percent of its stake in the company.
Buffett, who usually stays out of the technology sector began building up a stake in Apple as early as 2016. Since the beginning of the year, the shares have fallen due to concerns about a weakening of demand for the iPhone in light of the faltering Chinese economy. The first-quarter results released last week exceeded analyst expectations.
Buffett stated that Apple will remain his company’s largest stock investment by the end of this year, barring any unforeseen events
Tim Cook, Apple’s chief executive who attended the “Woodstock of capitalists” meeting, told CNBC that Buffett informed him about the stock sales one day before the annual general meeting. He said: “It is a privilege to be a shareholder of them.”
Berkshire’s cash pile reached a record of $189 billion as a result of the stock sales. This indicates that Buffett and other Berkshire officials are having difficulty identifying good investment opportunities. Buffett stated that the position could reach $200 billion in the next quarter due to the geopolitical uncertainty and the inflated stock market valuations.
I don’t care at all about building up the cash position under current conditions. Buffett said that he found the equity markets, and what was happening in the world to be quite attractive.
At the end of March, approximately three quarters of its equity portfolio value was concentrated in just five companies: Apple, Bank of America (American Express), Coca-Cola Company, and Chevron. Its stock value dropped from $356 billion to $336 billion. Net income fell from 35.8 billion dollars to $12.8 billion in the first quarter.
Berkshire Hathaway shares have risen by almost 11 percent since the beginning of the year. This is higher than the S&P 500’s 8 percent gain.
Buffett transformed Berkshire Hathaway from a failing textile firm to an investment monster encompassing listed holdings, Geico an American insurance provider, and BNSF Railroad, which operates North America’s largest freight rail network.
Buffett was on stage for the first time since Charlie Munger died in November at the age 99.
Shareholders received a hint as to how the responsibilities of leading the conglomerate will be divided among the small group that would eventually succeed Buffett.
Greg Abel (61), who will succeed Buffett in 2021, was also present. When Buffett succeeds, the chief executive and chairman Berkshire Hathaway’s energy business will have final say in capital allocation decisions for Berkshire’s portfolio of publicly traded stocks.
Investors have long considered Todd Combs, Ted Weschler and other managers of Berkshire equity portfolio as leading candidates for managing more or the entire portfolio.
Buffett stated that the number of managers calling him was “awfully near zero”, and the majority were answered by Abel. He said: “I’m not sure how he does this, but I’m confident that we have the right person.”