I confess, I still do not own BRK. One of the things that keeps me from pulling the trigger is the heavy concentration in APPL. I also do not own APPL, not the products nor the stock.
No concerns over this high concentration?
IP
I have no Apple position outside of brk,and a 20% allocation. So I have a 5% or so position in Apple through brk. I’m fine with that,all other things considered. If Apple were too large a concentration, you could always short x% of it to control your maximum allocation.
JK
If Apple were too large a concentration, you could always short x% of it to control your maximum allocation.
I admire everyone’s skills here at looking beyond buying and selling stocks, but I confess I am a pretty vanilla investor. Dabbled and frankly loved Mechanical Investing back in the 2000’s, even doing well in the market in the down market towards the end of that decade, though that was because of some seriously unmechanical violations to just buying the screen and choosing to avoid financials that the screen chose. Lucky me. MI almost resulted in divorce as DH is risk adverse and could not handle the volatility. Long way of saying I am not shorting or doing any of the more exotic things you all seem to do here. Picking stocks over index funds is exotic enough for my family.
Appreciate the idea nonetheless.
IP
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I confess, I still do not own BRK. One of the things that keeps me from pulling the trigger is the heavy concentration in APPL. I also do not own APPL, not the products nor the stock.
No concerns over this high concentration?
At end Q1, the Apple position was about 16% of Berkshire’s assets.
It’s not enough to make you change your mind about the other 84%, which is very reasonably priced right now.
As for Apple as an investment, I don’t currently own any either.
But, for whatever it’s worth, the current price of Apple is about 11% less than the price Mr Buffett paid for some Apple shares in March.
He’s not always right, but his average is better than that of most people.
So, buying a little bit of Apple today–whether directly or indirectly–would probably not work out too badly over time.
You’d do 11% better than Warren Buffett. Most people would take those odds.
Jim
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At end Q1, the Apple position was about 16% of Berkshire’s assets.
16% I would be fine with. I randomly googled a link this morning and was looking at this, which reports almost 43% Apple as their portfolio. That concerned me enough to pose the question here. Bad link? My vanilla understanding of the market getting in the way?
https://hedgefollow.com/funds/Berkshire+Hathaway
IP
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16% I would be fine with. I randomly googled a link this morning and was looking at this, which reports almost 43% Apple as their portfolio. That concerned me enough to pose the question here. Bad link? My vanilla understanding of the market getting in the way?
The 43% figure is a percentage of Berkshire’s portfolio of marketable securities, which includes shares of publicly traded companies such as Apple, Bank of America, American Express, Chevron, Coca-Cola, etc. The 16% figure accounts for the rest of Berkshire’s assets, such as wholly owned businesses like BNSF, Berkshire Hathaway Energy, Geico, See’s Candies, etc. When you buy a share of Berkshire, you are not just buying a share of Berkshire’s portfolio of marketable securities; you are also buying little pieces of all of Berkshire’s businesses. Therefore, the 16% figure is what you should consider when deciding whether Apple represents too much of a share of Berkshire for your taste/risk tolerance.
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16% I would be fine with. I randomly googled a link this morning and was looking at this, which
reports almost 43% Apple as their portfolio. That concerned me enough to pose the question here.
Bad link?
It’s about 40% of the stock portfolio, based on March 31 prices.
But Berkshire owns a LOT of things other than a stock portfolio.
It’s not just a closed-end investment fund : )
Jim
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The 43% figure is a percentage of Berkshire’s portfolio of marketable securities, which includes shares of publicly traded companies such as Apple, Bank of America, American Express, Chevron, Coca-Cola, etc. The 16% figure accounts for the rest of Berkshire’s assets,…
Awesome. Thanks so much. Sorry to the rest of you for cluttering up the boards more than necessary, but I felt this reply was worth more than a simple rec from me.
IP
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I confess, I still do not own BRK. One of the things that keeps me from pulling the trigger is the heavy concentration in APPL. I also do not own APPL, not the products nor the stock.
No concerns over this high concentration?
If you’ve been following mungofitch’s BRK evaluations, he’s been including a haircut for AAPL’s portion of BRK based on AAPL’s perceived overvaluation. Correcting for a more realistic valuation, in other words.
In hindsight, including the haircut seems wise.
That said, right now AAPL seems pretty good. P/E is high-ish comparted to recent history, but not that high. Has a moat. Prints money. Probably could do a lot worse.
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If you’ve been following mungofitch’s BRK evaluations, he’s been including a haircut for AAPL’s
portion of BRK based on AAPL’s perceived overvaluation. Correcting for a more realistic valuation, in other words.
In hindsight, including the haircut seems wise.
Whether it was smart or not, the market price is now a bit below the number I picked in my latest valuation exercise.
I value Berkshire’s Apple position based on the lower of market value and 21 times an eyeball-adjusted estimate of Apple’s current earnings rate.
Jim
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