Warren Buffett lost $4 billion in a day on Apple stock; why legendary investor may not be worried

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Published: January 4, 2019 12:49:49 PM

Even as the shares of technology giant Apple Inc plunged on Thursday, costing billionaire Warren Buffett’s Berkshire Hathaway a loss of more than $4 billion in a day, the legendary investor may not be too worried. We take a closer look.

Apple alone makes up about 25.7% of Berkshire’s total portfolio and is by far Buffett’s largest holding.

Even as the shares of technology giant Apple Inc plunged on Thursday, costing billionaire Warren Buffett’s Berkshire Hathaway a loss of more than $4 billion in a day, the legendary investor may not be too worried. Notably, while Warren Buffett holds more than 252.5 million shares of Apple, making Berkshire the company’s second-largest investor, has always maintained that he would like to see a decline in stock prices to add to his stake. Interestingly, Apple alone makes up about 25.7% of Berkshire’s total portfolio and is by far Buffett’s largest holding. “We would love to see Apple go down in price,” Warren Buffett said in May this year.

Apple’s stock market value has tumbled to below $700 billion from over $1.1 trillion at its peak in October, after including the after market hour drop. Warren Buffett started piling on Apple shares in the first quarter of 2016, when he purchased  9,811,747 shares. Since then, he’s increased his stake to 252.5 million shares, or about 5.3% of the shares outstanding, as of Sept. 30, 2018. At that time, Buffett’s investment in Apple was valued at about $57 billion, not including dividends.

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Apple’s warning on Wednesday about weak iPhone demand in the holiday quarter due to slower sales in China sent its stock down 10% intra-day. Notably, Apple shares have has now plunged more than 38.5% since closing at a record $232.07 on on October 3rd. At current market prices, the value of Warren Buffett’s stake, assuming it has remained the same size since Sept. 30, would be down about $4 billion on the day, and $21.1 billion since Sept. 30.

Notably, Warren Buffett said recently that his firm is adding to its stake in the firm, and he believes that iPhone is ‘enormously underpriced’. “They’ve got to keep having the product that this huge clientele regards as indispensable,” Warren Buffett told in an interview to CNBC in August this year.

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