2019: Is Buffett concerned about Apple's regulatory challenges?

ANDREW ROSS SORKIN: Thank you, Warren. Question on technology and the company’s biggest holding now.

“Given that Apple is now our largest holding, tell us more about your thinking. What do you think about the regulatory challenges the company faces, for example? Spotify has filed a complaint against Apple in Europe on antitrust grounds. Elizabeth Warren has proposed ending Apple’s control over the App Store, which would impact the company’s strategy to increase its services businesses. Are these criticisms fair?”

WARREN BUFFETT: Well, again, I will tell you that all of the points you’ve made I’m aware of, and I like our Apple holdings very much. I mean, it is our largest holdings.

And actually, what hurts, in the case of Apple, is that the stock has gone up. You know, we’d much rather have the stock — and I’m not proposing anything be done about it — but we’d much rather have the stock at a lower price so we could buy more stock.

And importantly, if Apple — I mean, they authorized another 75 billion the other day — but let’s say they’re going to spend a hundred billion dollars in buying in their stock in the next three years. You know, it’s very simple. If they buy it at 200, they’re going to get 500 million shares. They’ve got 4 billion, 600 million out now. And so they’ll end up with 4.1 billion under that circumstance.

If they’re buying at 150, they buy in 667 million shares. And instead of owning what we would own in the first case, we’d now — the divisor would be less than 4 billion, and we’d own a greater percentage of it.

So, in effect, a major portion of earnings — at least possibly, it’s at least been authorized — will be spent in terms of increasing our ownership without us paying out a dime, which I love for a wonderful business.

And the recent development, when the stock has moved up substantially, actually hurts Berkshire over time. We’ll still do — In my opinion, we’ll do fine, but we’re not going to dissect our expectations about Apple, you know, for people who may be buying it against us tomorrow or something of the sort. We don’t give away investment advice on that for nothing.

But we have — all the things you’ve mentioned, obviously we know about, and we’ve got a whole bunch of other variables that we crank into it. And we like the fact that it’s our largest holding. Charlie?

CHARLIE MUNGER: Well, in my family, the people who have Apple phones, it’s the last thing they’ll give up. (Laughter)