When I started dividend investing, I wanted to be cautious and not allocate more than 5 % of my portfolio to any given single stock. This makes sense since you want to avoid being hit to hard if things go wrong. But since I got into Apple stock in 2013, Tim Cook has done everything wright to please me as an investor ( buybacks, dividend increase, EPS going up obviously, free cash flow still growing.). So I haven’t been able to cash in my capital gain, because I believe there is still huge potential for both capital gain & dividend growth going forward. I am over 100% on both of my positions and will update shortly my portfolio holdings.
Looks like Warren Buffett is thinking something along those lines.
After Jan. 1 and before Apple reported earnings on Jan. 31, Buffett also personally bought 120 million Apple shares. Asked why, he said, “Because I liked it!”
The purchases that Buffett revealed on Monday give Berkshire Hathaway about 2.5 percent outstanding Apple shares. It also makes Apple one of Buffett’s company’s largest holdings, second only to Coca-Cola (KO).
At this point, Buffett owns $17 billion worth of the tech giant’s stock. The legendary investor said he upped his stake because of the consumer-retaining power of Apple and CEO Tim Cook’s smart capital deployment strategy.
“Apple strikes me as having quite a sticky product, and an enormously useful product to people that use it,” Buffett told CNBC.
The Berkshire Hathaway chairman and CEO said that late investor Philip Fisher’s 1958 book “Common Stocks and Uncommon Profits” inspired him to research how consumers feel about Apple products.
“He talks about something called the ‘scuttlebutt method,’ which made a big impression on me at the time, and I used it a lot,” Buffett said. “[It’s] essentially going out and finding out as much as you can about how people feel about the products that they [use.]”
And, while the results were favorable enough for Buffett to greatly up his stake in Apple, he said he does not personally own an iPhone.
Still, when asked which company he thinks is most likely to reach a $1 trillion valuation first, Buffett said he’d put his money on Apple.
“I’d bet on Apple just because they’ve got a stronger position,” the investment guru said, joking that if Cook wanted to swap positions, Buffett would be open to a deal.