Nearly Half of Warren Buffett's $369 Billion Portfolio Is in One Stock

Warren Buffett has a stellar record. He has compounded capital rapidly as Berkshire Hathaway CEO for decades. This is why regular investors closely monitor Oracle of Omaha holdings.  

Berkshire's $369 billion portfolio comprises dozens of stocks. However, Apple (NASDAQ: AAPL), the largest holding at 41.4%, stands out. As of April 2, FAANG stock has risen 542% since Buffett began buying the company in 2016. Before buying Apple shares today, investors should understand what attracted Buffett to the company.  

Apple's virtues Apple's popular hardware goods gave it one of the world's strongest brands in early 2016. This provided the firm pricing power. Consumers want to keep buying new tech. Buffett likes companies that can raise prices without affecting demand. Coca-Cola, another Berkshire asset, fits this criterion.  

Financial powerhouse Apple. The company has 30% operating margin in 2015. It generated $70 billion in FCF that year. This profitability persists. In fiscal 2023, Apple generated $100 billion FCF. Management distributed $15 billion in dividends and repurchased $83 billion in stock with this windfall.  

Along with financial performance, Buffett prioritizes valuation. Apple shares averaged 10.6 P/E in the first quarter of 2016. With market prices so high, this was a steal for a dominant corporation. Buffett seized the chance to buy.  

Do you want Apple stock now? Investors shouldn't buy Apple stock just because Berkshire and Buffett have done well with it. I recommend reassessing the problem. Investors may agree that Apple is no longer the bargain it was eight years ago when Buffett bought shares. I think this stock is pricey given its long-term performance.  

A 26.3 P/E ratio applies to Apple shares. Fair enough, this is down from 32.3 less than four months ago. It's still costly. Apple has less growth potential than it did three years ago. This company is much more mature.  

Sales fell marginally in fiscal 2023. Wall Street expects revenue and EPS to grow 4.4% and 8.3% annually over the next three years. Given these lackluster expectations, paying a high valuation multiple seems risky.  

We can't read his mind. Buffett may still possess the stock to avoid a taxable event. He might not know what to do with all the money, a dilemma Berkshire has been facing. Apple is a tremendous winner. Given current conditions, it's advisable to pass on the stock.  

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