Warren Buffett tries to justify his hypocrisy
by Horace Dediu
Shameful.
"I sold it too soon. But, I bought it even sooner, so," Buffett told CNBC's Becky Quick in an interview Tuesday on "Squawk Box" .
Apple remains Berkshire Hathaway's largest holding even after the conglomerate trimmed its stake to $61.96 billion at the end of last year, according to InsiderScore.
However, Buffett said Tuesday that he would continue to add to the position if it gets cheaper. He said the iPhone maker is not yet attractive even after falling more than 14% off its recent high, and dropping more than 6% this month. That's amid turmoil in the broader market, with both the Dow Jones Industrial Average and the Nasdaq Composite in a correction.
"I'm very happy to have it be our largest holding," Buffett said. "I was not happy to have it be as large as almost everything else combined."
"It's not impossible that Apple would get to a price, we would buy a lot of it," he added. "But not in this market."
Buffett said the firm has made more than $100 billion in the stock pretax, and was favorable in his comments regarding Tim Cook's leadership of the firm over Steve Jobs.
"Tim Cook has done better with the hand. Steve Jobs — he couldn't have done what Steve Jobs did — but Steve Jobs handed him a hand that Steve would not have done as well," Buffett said.
"Tim was a fantastic manager, and he's a good guy, and somehow he gets along with everybody in the world," he added. "That's a technique I wouldn't have, for example, certainly my partner, Charlie Munger, wouldn't have had it."
Source: CNBC
NB: Warren Buffett said he sold Apple stock too soon but clarified he has no actual regrets. Buffett said it is better than any business Berkshire owns outright including its railroad, which is worth more in dollar terms but earns nowhere near the return on capital that Apple does. He also said his railroad might last longer than Apple.
He said if Apple ever got cheap enough, he would buy a lot more of it. He owned a lot more of it priced a lot lower than what he would have to buy it back at. Complete nonsense.
Also Warren Buffett:
Quote: "Our favorite holding period is forever". Action: Trade Apple to realize gain.
Quote: "Price is what you pay, value is what you get". Action: Trade Apple to make $100 billion pretax, mention that price determines decision.
Quote: "At a healthy business, cash is sometimes thought of as something to be minimized as an unproductive asset that acts as a drag on such markers as return on equity" Action: Sell Apple and other equities and move $300 billion into unproductive cash.
Quote: "Investors, of course, can, by their own behavior, make stock ownership highly risky. And many do. Active trading, attempts to ‘time’ market movements..." Action: time decision to trade Apple for cash on the basis of price, tax and market conditions.
Quote: Apple is "probably the best business I know in the world," "we like to own businesses not stocks". Action: Convert Apple ownership into cash.
Quote: "I'd love to own 100 percent" of Apple. Action: Sell 60% of Apple holdings.
Quote: "I don't think of Apple as a stock. I think of it as our third business" Action: Sell Apple, move into unproductive asset cash.
Quote: "I sold Apple too soon". Action: Also say that you don't regret it.
Actions speak louder than words. The results will be felt by his shareholders.
5 comments
Gaurang Donovan ·
Speaking for themselves
2012 - first time Tim Cook talked to Warren Buffett - the $100 billion in cash discussion and option https://m.youtube.com/watch?v=C0cvcgFM_Fk
(2016 - first time Warren Buffett acted to buy Apple shares as an investment for Berkshire)
2025 - First time Warren Buffett alludes to and acknowledges a fact of return on investment to just how quantifiably important and valuable a decision in 2016 in the last 9 years of his working career, even after the previous half a century of running his conglomerate. And thanks his humbled helper
https://m.youtube.com/watch?v=wf7CuKTl_V4
Their words.
2026 question - should Warren Buffett call Tim Cook and have his Berkshire $300 billion plus in cash discussion and options
Sacto Joe ·
He's as human as the rest of us. He fucked up, and he doesn't want to admit it.
Far better to fuck up and change....
Sacto Joe ·
One interesting possibility, and one I'd like Horace to address:
If the Titanic-like marketplace truly goes under - and it being so much a casino that now has a completely neutered SEC overseeing it, so it's definitely possible - then folks like Warren Buffett will have a huge opportunity to take that cash and buy into, not just Apple, but a lot of very solid companies, and at fire sale prices.
So maybe not so dumb after all....
Jim Fonda ·
For me, Warren’s most important comment was when he said he was not happy that aapl almost as large as everything else combined. AAPL was and is a great investment. However, Berkshire’s business doesn’t really work with have of their assets in one investment. In addition, he was passing control, and wanted to make changes before that rather than leaving that for his successor.
So, I see nothing wrong with what he did with Apple. I do think he could have been more clear in describing his reasoning.
Horace Dediu ·
This is extraordinarily wrong and a contradiction of all that he has said in the past. 1) concentration is not wrong. He has said frequently that there is nothing wrong with putting all your eggs in one basket as long as you watch that basket. 2) He has instead concentrated a huge amount of the assets in CASH which is, by his own admission, a terrible, if not evil asset class. 3) Why does passing control have anything to do with the value of the asset or portfolio? Is it vanity? The perfect time for holding is infinity not to "optimize for taxes" or "transition". 4) I see everything wrong with his trading Apple shares as if he was a fickle teenager. An absolute disgrace and permanent stain on his legacy.