Q1 AAPL Purchase

Becky just said on CNBS this morning that she spoke with Buffett yesterday (Sunday).

She asked him about the Q1 AAPL purchase.

Buffett told her he spent about $600 million worth in February? when the stock price dropped (~$160/share).

Buffett apparently also told her he would have bought more if the price had stayed down, or gone down further.

AAPL trading at $157/share in pre-market.

Gives an idea of whether or not Mr. Buffett thinks AAPL is overvalued. He obviously thinks it is worth more, not less than the current trading price.


“Gives an idea of whether or not Mr. Buffett thinks AAPL is overvalued. He obviously thinks it is worth more, not less than the current trading price.”

yep. no haircut from him

It really is illuminating and it surprised me. He is well aware, and quoted the figure in the meeting, that Apple makes “about a hundred billion a year” vs. a $2.5 trillion market cap that he is interested in purchasing shares at. He also applauds Tim Cook as a CEO constantly and implicitly endorses AAPLs share repurchases at $2.5 Trillion+ valuation.

So Warren is interested in a 4% initial earnings yield. I gather this is because he sees this initial earnings yield increasing over time with less risk than alternatives. He understands the capital return program at Apple and is confident of steadily increasing cash dividends and a relentlessly falling share count.

Warren also likes a liquid stock and can buy and sell vast sums of Apple in a short period of time if needed - there aren’t a ton of those available for the position size Berkshire would like to own these days.

He used to wax poetic all the time about the “ideal business” - one that earned vast sums and didn’t have to reinvest the cash in the business to stay competitive and stay in the game. Apple “makes” about $100 billion per year and returns about $100 billion a year to shareholders and will likely continue this approximately 100% capital return for quite a while into the future. And it’s huge, long term oriented, with excellent managers. Maybe he sees glimmers of his “ideal” business…


Becky just said he bought (AAPL) when the price dropped (did not specify when exactly this time). AAPL prices in Q1 were lowest on March (< $151).

Becky also added that Buffet told her: “Who knows how much more we would have bought if it had dropped further.”

So Buffett thinks AAPL is worth “significantly” more than $151/share.

CNBS has the full meeting up on their website:

Buffett on buybacks (1:13:55): “If you do it at the right price, there is nothing better than buying in your own business. We own…I mention Apple as an example. We own…how our interest in Apple …you know over time…a company that earns $100 billion a year, that means if our interest goes up 0.10% we’ve added another $100 million to (BRK) earnings. It takes a lot of work to generate $100 million in earnings. And you know in the first quarter they just reported. They are on a fiscal year but they just reported their March quarter and they earned more money and they had fewer shares outstanding. And, we actually bought a little more Apple in the first quarter. So, we decided we wanted to own more, a greater interest, and on top of that we knew that we would own an even greater interest if they kept buying in their shares, which we didn’t have any inside information or anything but would certainly would seem the way to bet. We feel better because we bought the shares we bought in the market, and we feel just as good about the fact that they (AAPL management) used their cash to buy out some of the other people. It is the simplest thing in the world. It is unbelievable how people can’t figure out something this simple…”

So Buffett doesn’t seem overly upset that AAPL management has been buying back stock at prices on a quarterly basis that some here think is way too high. In fact, it sounds as if Buffett and Munger are delighted about it. Perhaps their delight lies in the fact that Cook/Maestri aren’t blowing the fountain of cash on acquisitions or something else stupid.


Apple’s pricing power is unbelievable. For hundreds of millions of Apple fans worldwide, they wouldn’t switch to other brands for almost any price (to certain limit, of course).

Gives an idea of whether or not Mr. Buffett thinks AAPL is overvalued. He obviously thinks it is worth more, not less than the current trading price.

I am wondering whether Buffett is using the dividend and increasing his ownership position. Berkshire ownership gets slowly increased overtime via buyback, and now he is using dividends to acquire more shares, increasing ownership.

What is the big difference? right?

Just wondering why people don’t feel confident on buyback by the company but feel great about Buffett using dividends to buy shares?

I don’t know…