Apple and Berkshire Hathaway seem to be in a race of sorts. Apple spends tens of billions each year to buy back its own stock. Meanwhile, Warren Buffett spends tens of billions to buy Apple Stock. Who will win the race?
Fanboy. Boyfriend. Owner.
Apple’s stock buy back program reduces the number of shares on the market, which, ostensibly, should increase the company’s stock valuation. So far, that strategy has worked because AAPL is at record levels with an ever-decreasing number of shares available for public investors.
Warren Buffett’s company has been buying up Apple stock the way President Trump’s attorney Michael Cohen has been buying the silence of Trump dalliances (which seem to grow in number).
We like very much the economics of their activities. We like very much the management and the way they think.
Apple has always been, at least since co-founder Steve Jobs’ return in 1997, something of a contrarian company with old fashioned principles. Ditto for Berkshire Hathaway which seems to invest mightily where returns are highest. That includes Apple where Buffett’s stock ownership is closing in on 10-percent of all Apple’s stock.
Is Apple in a race against Warren Buffett to own Apple and take the company away from the public?
I clearly like Apple. We buy them to hold. We bought about 5 percent of the company. I’d love to own 100 percent of it.
Is this a race? I ask because Apple just embarked on another $100-billion stock buy back program, thanks to the new tax plan and tax cuts (both of which combined to make Apple richer than rich, and repatriate overseas profits).
I have some issues with Apple’s buy back program and it has nothing to do with Warren Buffett. First, I don’t think Buffett wants to own Apple. But Apple might want to own Apple and that seems to be the path the company is on now.
Apple CFO Luca Maestri:
…it makes perfect sense for us not to keep the cash on our balance sheet but return it to investors.
Translation: “We can’t figure out how to make more money with new products or acquisitions.”
What do investors do for Apple? Early investors in a company help the company to grow. Once a company goes public (IPO) investors in the stock are little different than gamblers in Las Vegas. Apple does not benefit when an investor buys stock because that investment does not go to Apple’s bank account. Of course, the company can buy low and sell high— its own stock– but that’s not what CEO Tim Cook, CFO Luca Maestri, or even Warren Buffett are talking about.
Both companies are gambling on the future. Both are in a race to gain the most value while Apple prospers. I wonder, though– does Apple have anything in the bank for a rainy day?