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Warren Buffett in annual letter calls Apple one of ‘Four Giants’ driving the conglomerate’s value


Warren Buffett is chairman and CEO at Berkshire Hathaway Inc

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Warren BuffettHe now views tech giants as a possibility AppleOne of the four pillars that drive Berkshire HathawayHe’s the founder of a conglomerate of businesses mostly in the old economy that he’s built over the course the last 50 years.

According to his shareholder letter, released Saturday, the 91 year-old investment legend listed Apple under “Our Four Giants”. He also referred to the chief executive as the company’s second-most valuable after Berkshire and its insurer cluster.

The brilliant Apple CEO Tim Cook views Apple users as his first love. However, all his constituents benefit from Tim’s managerial touch.” letter stated.

Buffett stated that he supports Cook’s stock-repurchase strategy. It gives Cook greater ownership over each dollar of Apple’s earnings, without an investor even having to move a finger.

“Apple – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Buffett stated in the letter that a mere 5.5% of our ownership has been achieved, compared to 5.39% one year ago. It sounds small potatoes, but that increase is not surprising. However, each $0.1% Apple’s 2021 earnings equaled $100 million. Our accretion was not possible without using Berkshire funds. Apple’s Repurchases accomplished the task.

Under the guidance of Buffett’s investment deputies Ted Weschler and Todd Combs, Berkshire purchased Apple stock in 2016. Mid-2018 saw the company acquire 5% of Apple maker’s stock, which was worth $36 billion. Today, the Apple investment is now worth more than $160 billion, taking up 40% of Berkshire’s equity portfolio.

“It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. But our share of Apple’s earnings came to an astonishing $5.6 trillion. Buffett stated that a large portion of the money retained by Apple was used to buy Apple shares. This is an action we appreciate.

Outside of exchange-traded funds providers and index fund providers, Berkshire holds Apple’s largest share.

Buffett also credited BHE’s energy segment BHE (railroad business BNSF) and BNSF (transportation company BNSF) as being two of the other major players in the conglomerate. They both posted records earnings for 2021.

Buffett stated that BNSF, America’s third Giant, is still the most important artery for American commerce. This makes Berkshire an invaluable asset. BHE has grown to be a powerhouse utility and is a leader in solar, wind, and transmission across the United States.

Operating earnings at Berkshire jumped 45% during the fourth quarter, as the railroad, utilities, and energy businesses continued to recover from the pandemic.

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