- Warren Buffett’s Berkshire Hathaway has Apple shares and cash worth 52% of its entire market capitalization.
- The billionaire investor’s company owned $113 billion in Apple stock and $147 billion in cash at the last count, representing more than half of its $499 billion market cap.
- Berkshire’s market value suggests the rest of its business is worth less than $240 billion, even though it generated more than $250 billion in revenue last year.
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The famed investor’s conglomerate held about 245 million Apple shares as of June 30, giving it a roughly 5.7% stake in the iPhone maker. Apple’s stock price has soared about 57% to an all-time high this year, boosting the value of Berkshire’s position by more than $40 billion to around $113 billion as of Tuesday’s close.
Buffett’s company also boasted a record $147 billion in cash and US Treasuries at the end of June – an increase of about $19 billion from the end of December 2019.
Meanwhile, Berkshire’s stock price is down about 9% this year, weighing on its market cap. By comparison, the S&P 500 and Nasdaq indexes both closed at record highs on Wednesday.
The outcome of Berkshire growing its cash pile and its Apple stock climbing in value, while its market cap remains depressed, is that its cash and Apple shares are now worth more than half of the entire company.
Admittedly, Berkshire has ramped up its spending since the end of June. It agreed to pay about $4 billion in cash for Dominion Energy's natural-gas assets, plowed around $2.1 billion into Bank of America stock in the three weeks to August 4, and appears to have repurchased roughly $2 billion of its own stock in July.
However, that still leaves it with around $139 billion in cash and a total of $252 billion in cash and Apple stock, representing more than 50% of its current market cap.
Berkshire's market value implies that without the Apple shares and cash, the rest of its business is worth less than $240 billion. That's hard to believe given the massive scale and diversity of its operations.
Buffett's company owns scores of businesses including Geico, See's Candies, Dairy Queen, Duracell, Fruit of the Loom, NetJets, Precision Castparts, PacifiCorp, MidAmerican Energy, the BNSF Railway, and Marmon, which itself owns more than 100 manufacturing and services businesses.
Berkshire also generated about $254 billion in revenue and $69 billion in pre-tax income last year, excluding a roughly $34 billion gain on its Apple stock and around $750 million in dividends from the tech titan.
Moreover, strip out Berkshire's cash and Apple stock and it still boasted about $160 billion in net assets as of June 30.
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Berkshire's market cap doesn't seem to reflect its size, asset base, and financial health. The company is exposed to the pandemic through its its numerous insurance, manufacturing, retail, industrial, and service businesses, but its current valuation still seems disconnected from reality.