AAPL No Longer Most "Valuable" Company

Price is what you pay. Value is what you get?

Whatever…

Buffett was buying in Q1 at prices significantly higher than today’s early morning quote.

Cook/Maestri are going to buy $90 Bn more going forward.

Cheaper hamburgers.

As I travel (airports, amusement parks, museums) see more and more people (young and old) with their faces glued to these things.

iPhone will be the last thing they let go of in the coming financial Armageddon.

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“It’s probably the best business I know in the world,” Buffett said in a CNBC interview in February 2020. “I don’t think of Apple as a stock. I think of it as our third business.”

I’ve been nibbling AAPL recently.

AAPL volume has been averaging around 120 MM shares a day in May.
16.2 BN AAPL shares outstanding.
60% of shares held by institutions (mutual (index?) funds).

How much can Buffett( and AAPL) buy(back)?

This quote from the AM really struck me:

"But the market has been extraordinary.

Sometimes it’s quite investment oriented. It’s not like it — it’s always what you’ve read about in the books and everything — what capital markets are supposed to do, and you study it in school and all that. And other times, it’s almost totally a casino, and it’s a gambling parlor.

And that existed to an extraordinary degree in the last couple of years — encouraged by Wall Street because the money is in turning over stocks. I mean, people say how wonderfully you’ve done if you bought Berkshire in, you know, 1965 or something and held it. But your broker would’ve starved to death.

Wall Street makes money on — one way or another — catching the crumbs that fall off a table of capitalism and an incredible economy that, you know, nobody could’ve ever dreamed of a couple hundred years ago.

But they don’t make money unless people do things (laughs) and if they get a piece of them.

And they make a lot more money when people are gambling than when they’re investing. It’s much better to have somebody that’s going to trade 20 times a day and get all excited about it, just like pulling the handle on a slot machine. You know, that’s who you — you know —

You may not say that you want that person. You’d like the other kind of person, too, maybe, but that’s where you make the money. (Laughs)

And the degree to which the market got dominated by that is shown on a slide some — I have it here somewhere. Yeah. Here’s — on [slide] Oxy-one — if you’ll put up the Oxy-one.

That shows how we bought what became — well, we bought in two weeks, or thereabouts, 14% of Occidental Petroleum.

And you’ll say, “Well, how can you buy 14% of a company in two weeks?” And it’s more extreme than that, because if you look at the Occidental proxy, you’ll see that — the standard names — BlackRock index funds, State Street index funds, basically, Vanguard index funds, and then one other firm, Dodge & Cox.

If you take those four entities — and they’re not going to buy and sell stock — they may get their own little — so they own 40% of the company, roughly, those four firms.

And they didn’t do anything during this period. So now you’re down to 60% of the Occidental Petroleum Company that’s even available for sale.

Occidental’s been around for years, and years, and years. Big company, all kinds of things.

And with 60% of the stock outstanding, I go in and tell Mark Millard, this fellow that is 30 feet away from me or so, and I say in the morning to him, you know, “Buy 20% and take blocks, or whatever it may be.”

And in two weeks, he buys 14% out of 60%. That’s not investment. (Laughter)

I mean, you’re not buying from — I find it just incredible.

You wouldn’t be able to do that with Berkshire. I mean, you can’t — literally buy it. You can say you want to buy 14% of the company. It’s going to take you a long, long time.

But, overwhelmingly, large companies in America — well, all of them — they became poker chips. And people were buying and selling like three-day calls or two-day calls. And the more people — times people pull the handle on the machine, the more money the machine makes. I mean, it’s very clear.

And overwhelmingly — I mean, where did the people go? The investors just were sitting around and there weren’t very many, and the money was being made, essentially, by a bunch of people gambling on things. And that enabled us, in a two-week period, to buy 14% of a business that’s been around for decades.

Imagine trying to buy 14% of the farms in two weeks in this country, 14% of the apartment houses, or 14% of the auto dealerships, or just anything, when already 40% were locked up some other place.

It is — it defies anything that Charlie and I have seen, and we’ve seen a lot.

But I’ve never seen that percentage of the American public — essentially, it was a gambling parlor.

And the people that were making money were people that worked with gamblers. (Laughs)"

https://buffett.cnbc.com/video/2022/05/02/morning-session—…

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That was a heartwarming excerpt from the annual meeting. Heartwarming in part because Warren sounded really good there. Seems to be doing fine cognitively. And it is heartwarming because it reminds me of all of the teaching that Warren and Charlie have done for me over the years. And in this excerpt they taught me again. They have perspectives that I just don’t have unless they teach me their perspectives.

I do feel some sweet sorrow, thinking of all they have done for me and realizing they are getting older. I love Warren and Charlie and I always will.

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Luca and Warren are probably both buying. Will be interesting.

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I like Buffett, obviously, but comparing buying 14% of OXY to “14% of the farms in two weeks in this country, 14% of the apartment houses, or 14% of the auto dealerships, or just anything, when already 40% were locked up some other place.” isn’t a very fair comparison.

I get is point but it wasn’t a very good analogy in my opinion.

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Berkshire bought about 132 million OXY shares over 13 market days. Market volume more than tripled, and market price increased 33%. This made the options more valuable. This works if OXY is bought out, but fails after major selling. The table stakes for this game are quite high.

— data —

                         OXY                   OXY               XOM                  XOM
                 OXY   pct Chg      OXY      pct Chg     XOM   pct Chg      XOM     pct Chg
     Time       Price   Price     Volume     Volume     Price   Price     Volume    Volume
  5/13/2022     63.62           15,799,419              88.39           9,983,031
  5/12/2022     59.22           23,862,800              86.30           29,491,500
  4/18/2022     61.37           30,802,400              88.55           19,032,200
  4/14/2022     59.34           18,789,300              87.83           24,566,400
  3/17/2022     58.01           59,355,400              78.98           34,041,900
  3/16/2022     52.99           43,406,300              76.93           37,812,300
  3/10/2022     58.13           81,812,500              85.36           44,644,200
   3/9/2022     57.50           134,668,900             82.79           65,466,600
  2/28/2022     43.73           50,039,500              78.42           32,204,600
  2/25/2022     38.74           29,780,400              77.84           28,310,200
  2/14/2022     41.23           21,485,900              78.98           34,652,700
  2/11/2022     42.98           24,477,900              80.21           42,002,000
 
    average     54.57           36,250,076              83.38           31,839,783
Feb11 to Feb25  39.78           21,558,980              77.80           30,645,410
Feb28 to Mar16  53.04    33%    68,417,156     217%     82.10    6%     45,039,300    47%
Mar17 to May13  58.68    11%    27,962,574     -59%     85.55    4%     27,294,438    -39%

— background links —

Warren Buffett’s Berkshire Hathaway buys more Occidental Petroleum stock, boosting its bet on the energy giant to about $7.5 billion, May 13, 2022
“Berkshire also holds around 84 million stock warrants with an exercise price of $59.62 — just above Occidental’s closing stock price of $59.22 on Thursday. If Berkshire were to exercise its warrants and retain the resulting stock, it would own 227 million Occidental shares, or about 23% of the company. Berkshire piled $7 billion into Occidental stock between February 28 and March 16”
https://markets.businessinsider.com/news/stocks/warren-buffe…

Subject: Re: BRK vs SPX, Date: 3/4/2022
In Q2, Buffett sold all 18.9 million shares Berkshire had accumulated, presumably for about $20/share. Shares are now close to $60, so in retrospect, Buffett would have done even better had he been a little more confident in Occidental’s prospects.
https://discussion.fool.com/web-has-been-skewing-far-towards-saf…

Subject: Occidental paying Berkshire’s pref div in stock, Date: 4/15/2020
Occidental issuing 17.27m shares to pay the perferred dividend
https://discussion.fool.com/occidental-paying-berkshire39s-pref-…

Subject: OXY, Date: 8/7/2019
Occidental Petroleum Corp. OXY.
Price near 52 week low. ($45/share)
P/e < 10
Dividend yield > 6%
Berkshire invested $10B in preferred shares with the option to purchase at $62.50/share.
https://discussion.fool.com/oxy-34267985.aspx?sort=whole#3426798…

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I get is point but it wasn’t a very good analogy in my opinion

Is it possible that you missed the point of the analogy? (with all respect)

The only big difference between the two is the spectacular gap in liquidity.
They are both places to put capital to work with the expectation of receiving a stream of future profits.
One has a preposterously high level of liquidity because there is an army of players keen on, in effect, gambling on the short term price movements.
It’s interesting that there is a handy side effect of their frenetic and relatively pointless activity.

Jim

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