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The best investment that Warren Buffett made

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rajatagrawal
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Being a Value Investor, Warren Buffett has always believed in a concentrated portfolio, often stating, "diversification is a protection against ignorance. It makes very little sense for those who know what they're doing."

Investment in Apple is the largest and by far the most profitable investment that Berkshire Hathaway has ever made. On an initial investment of $36 billion, it has made approximately $43 billion. Almost all of that gain is yet to be realized and has been achieved just in the last 12 months.

Berkshire Hathaway's purchase of more than 255 million Apple shares was the single greatest investment ever made of a publicly listed company in history. And by far, this is the most profitable investment of a listed company that Buffett has ever made. Warren Buffett has consistently compounded money at almost a +20% annual rate of return over more than half a century of his career.

After the huge success as well as size of this investment in Apple, it is yet to be seen if Buffett holds or sells a large portion of the Apple shares.

Let's chronicle the history behind this enormously successful investment made by Berkshire Hathaway in Apple :

  • Berkshire Hathaway first disclosed the purchase of 9.8 million shares of Apple (at the time it was worth a bit more than $1 billion) in a 13F filing with the SEC on May, 16, 2016. (Buffett later confirmed on CNBC that either Todd Combs or Ted Weschler - his two investment managers - made the investment).
  • Since the original 9.8 million share investment was disclosed, Warren Buffett piggybacked his managers and, by the end of 2018, Berkshire Hathaway owned 255.3 million shares at a cost of about $36 billion ($141/share).
  • In a 13F in late November, 2018, Berkshire Hathaway announced it sold 2.9 million shares of Apple. At the time the sale was generally believed to have been sold by Todd or Ted in order to make room for some other investment.
  • In an interview with CNBC in February, 2019 (following a first quarter warning and after a -20% share price drop from September, 2018) Warren Buffett declared that Apple's shares were too expensive to purchase at the then current level of $175/share. ("If it were cheaper, we'd be buying it. We aren't buying it here.")
  • In a 13F in late November, 2019 Berkshire Hathaway announced it sold an additional 750k shares of Apple.
  • Apple's shares closed at about $166/share on December 31, 2018 - providing an unrealized gain of approximately $4.2 billion.
  • Apple's shares closed at $300/share on December 31, 2019 - and the estimated unrealized gain grew to about $38 billion.
  • Apple's shares closed at $318/share last Friday - increasing the estimated unrealized gain to almost $43 billion.

This is probably the most substantial dollar return of any investment made by any entity of a publicly held company in history.

Source : Real Money