2021: Why did Berkshire trim its Apple position?

BECKY QUICK: This question comes from Vittorio Agueci, from Switzerland, who writes in, “Why, in the recent past, did Berkshire sell some of the common stocks owned on Apple?

“If the company is considered Berkshire’s ‘Fourth Jewel,’ why didn’t Berkshire buy more of Apple’s stocks in 2020? This seems to be counterintuitive.”

WARREN BUFFETT: Well, we have 5.3%, or something like that, now. It’s gone up in the first quarter because we bought in our shares, which helps our own shareholders expand their interest in Apple indirectly without laying out a penny.

And then Apple’s repurchased its shares and just announced another repurchase program.

So, let’s say — we look at Apple as a business that we own at 5.3%. Now we’ve got — it’s a marketable security, so it shows up as way greater than any other marketable security we have.

But, of course, if you look at our railroad, as we mentioned — well, the Union Pacific is selling for about 150 billion on the market, and we own one that’s a little larger than the Union Pacific and making a little less money, but not much less.

So, it’s a — it’s an extraordinarily — Apple — it’s got a fantastic manager. (CEO) Tim Cook was underappreciated for a while. He’s one of the best managers in the world, and I’ve seen a lot of managers.

And he’s got a product that people absolutely love. And there’s an installed base of people and they get satisfaction rates of 99%.

And I get the figures from the (Nebraska) Furniture Mart as to what’s being sold, and if people come in and they want an Android phone, they want an Android phone. If they want Apple — they want an Apple phone — you can’t sell them the other one. (Laughs)

The brand — and the product is an incredible product. It’s a huge, huge bargain to people.

I mean, the part it plays in their lives is huge. I use it as a phone, but I’m probably the only guy in the country. You know, maybe some descendant of Alexander Graham Bell’s doing the same thing.

But it is indispensable to people. And, you know, it costs — you know, a car costs $35,000. And I’m sure, with some people, if you asked them whether they want to give up — had to give up — their Apple or give up their car, you know, really make the choice for the next five years, you know, who knows what they’d do?

And, it is — and you know, we got a chance to buy it, and I —

I sold some stock last year, although our shareholders still had their percentage interest go up because we repurchased shares. But that was probably a mistake.

In fact, Charlie, in his usual low-key way, let me know that — you thought it was a mistake, too, didn’t you, Charlie? (Laughs)

CHARLIE MUNGER: Yes.

WARREN BUFFETT: Yeah. (Laughs)

Yeah, I can only do so many things that I can get away with, with Charlie. (Laughs)

And I kind of used them up between Costco and Apple. (Laughter)

So — and incidentally, he probably — he’s very likely was right in both circumstances.

It’s an extraordinary business.

But I do want to emphasize that, in his own way — it’s a different way — but Tim Cook is — we see a lot of managers of a lot of businesses, and you’re looking at two great ones on both ends here.

He’s handled that business so well. He couldn’t do what Steve Jobs, obviously, could do in terms of creation.

But, I don’t — but Steve Jobs couldn’t really, I don’t think, do what Tim Cook has done, in many respects.

CHARLIE MUNGER: Well, I also think it’s clear that that list you showed, of the leading American companies — it’s been very important for America that we’ve done so well in this new tech field.

And I personally would not like to see our present giants brought down to some low level by some anti-competitive reasonings. I don’t think they’re doing a lot of harm, anti-competitively.

I think they’re a credit to the Americans — credit to our civilization.

WARREN BUFFETT: Yeah, and they’re huge.

CHARLIE MUNGER: And they’re huge. And that’s good for us.