Our old nemesis says Buffett should have been “peeling out” of the stock before his $36 billion investment doubled.
From Nicole Friedman’s “Warren Buffett Found His ‘Elephant’ With Giant Stake in Apple” ($) in Friday’s Wall Street Journal:
Mr. Buffett started to study Apple after one of his portfolio managers, either Ted Weschler or Todd Combs, bought about $1 billion in Apple shares for Berkshire in early 2016.
As he studied the company and questioned his great-grandchildren about their allegiance to Apple products, Mr. Buffett decided Apple was a retail company he could understand.
“I didn’t go into Apple because it was a tech stock,” Mr. Buffett said at Berkshire’s 2018 annual meeting. He cited the strength of the company’s brand and its capital return strategy. “I don’t think that required me to take apart an iPhone or something and figure out what all the components were or anything. I think it’s much more the nature of consumer behavior,” he said.
Berkshire’s bet has paid off. Apple’s shares soared 86% in 2019 and have climbed another 9.1% so far this year.
“What’s surprising is how fast it increased,” said Doug Kass, president of Seabreeze Partners Management Inc. Given the current size of Berkshire’s Apple stake, “it seems to me that it would be prudent for [Mr. Buffett] to be peeling out of some stock,” he said.
My take: What a maroon.