Author Topic: Apple is now 14% of BRK's market cap  (Read 1374 times)

Libs

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Apple is now 14% of BRK's market cap
« on: January 17, 2020, 09:35:05 AM »
Sorry if I missed this in another thread...

By my math...80B / 565B= 14.1%

Two things occur to me.

1)  Obviously a great buy, over $40B in unrealized gains. I don't hear Warren get much press or credit for this.
2)  How do BRK owners feel about this? makes me a little uneasy.
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thepupil

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Re: Apple is now 14% of BRK's market cap
« Reply #1 on: January 17, 2020, 09:56:17 AM »
I manage my parents accounts and they own both. I consolidate the look through Apple owned by Berkshire and the directly held apple as one position in order to guesstimate total AAPL exposure, even though in theory Berkshire could sell AAPL any time. Because both Berkshire and Apple have gone up (Apple moreso) this has led to trimming of the consolidated position, primarily via direct sales of apple. I have never personally liked Apple; have been completely wrong on it.

I am personally a levered holder of Berkshire. I'd prefer Berkshire take some gains on the Apple and use after tax proceeds to buy back stock (along with excess cash, you could do $120 billion tender or something). But I assume that won't happen.


Dynamic

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Re: Apple is now 14% of BRK's market cap
« Reply #2 on: January 17, 2020, 03:13:40 PM »
I think you're correct that Berkshire won't sell the main Apple holding unless the story changes for the worse. It's not easy to deploy $81 billion, or perhaps $72 billion after tax on gains into anything that's 30-40% more attractive, which I'd imagine is the hurdle that would be required at minimum to make it worthwhile to pay those taxes. It might make sense to buy something that would compound 5% faster for. 10 years, say.

Jurgis

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Re: Apple is now 14% of BRK's market cap
« Reply #3 on: January 17, 2020, 03:22:40 PM »
AAPL might not be cheap on the absolute level anymore, especially if you assume steady or declining sales/profits. If sales/profits grow, then it might do OK from current price.

For tax deferred accounts, I am not sure if it's worth selling although I can see the reason why people would sell.

For taxable accounts - and for BRK - IMO selling creates a huge tax headwind for performance. If we talk about taxable accounts, I totally understand Buffett's suggestion to never sell, since taxes are gonna handicap you a lot making it so much harder to outperform.
So BRK should definitely not sell AAPL (oh wait Todd or Ted sold already, so too late  8) ).

(BTW, similar headwind applies to people who invest into funds with Buffett-partnership fee model. Actually it's like paying tax every year...)
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ValueMaven

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Re: Apple is now 14% of BRK's market cap
« Reply #4 on: January 19, 2020, 05:24:42 PM »
AAPL and Cash = nearly 40% of Berk at this point ... insane!