Why Berkshire's Stake in Apple Still Matters More Than People Think

The headlines suggest Berkshire Hathaway (NYSE: BRKB) has moved on from Apple (NASDAQ: AAPL). Warren Buffett trimmed the position heavily before stepping down, and new Chief Executive Officer Greg Abel has grabbed attention by piling into Alphabet (NASDAQ: GOOG) shares instead. Look closer, though, and Apple still matters far more than the narrative suggests. It remains Berkshire's single largest stock holding, and the reasons run deeper than the selling implies.

Still the anchor of the portfolio

Start with the raw size. Even after Berkshire sold roughly a quarter of its stake, cutting the position from about 300 million shares to roughly 228 million, Apple still makes up about 22% of the company's equity portfolio, worth somewhere around $60 billion. That is comfortably the biggest position it owns, larger than American Express (NYSE: AXP) and larger than the new Alphabet stake everyone keeps talking about. Berkshire also sits on an enormous unrealized gain, since Berkshire's cost basis is a fraction of today's price, and the shares throws off a steady stream of dividends every year. Whatever the trimming implied, Apple is not a relic in this portfolio. It is the foundation.

The quiet compounding people miss

Here's the part that caught my eye. Apple spends tens of billions of dollars a year buying back its own stock, steadily shrinking the number of shares in circulation. That matters for Berkshire in a subtle but powerful way. Because the total share count keeps falling, Berkshire's ownership percentage of Apple slowly rises even though it hasn't bought a single new share. Its claim on Apple's future profits quietly grows on autopilot.

Image source: Getty Images.

Buffett has praised exactly this dynamic for years, calling it one of the reasons he loved the investment. He once compared it to your ownership of a business rising simply because your partners keep buying each other out. It means Apple keeps working for Berkshire in the background, compounding its stake without any action at all. Most commentary about the selling neglects this entirely.

Why the trim doesn't mean what people think

It is tempting to read the share sales as Berkshire's loss of faith. I would read them differently. Apple's position had grown so large that, at one point, it was worth more than everything else in the equity portfolio combined, a level of concentration that made even Buffett uncomfortable. Trimming was about managing risk and locking in enormous gains at a rich valuation, not abandoning the thesis. Choosing to keep roughly $60 billion in Apple, rather than exiting entirely, is a statement of enduring conviction under Abel, not a goodbye.

None of this makes Apple untouchable. Its growth has slowed, it is widely seen as trailing in artificial intelligence, and it is navigating a leadership handoff to new CEO John Ternus. But Ternus has expertise in hardware engineering. This leadership change could sharpen the company's focus on its products division, an area that already has a tremendous track record. Apple stock also trades at a premium, and the fact that even Berkshire took profits is a reminder that valuation matters. A stumble at Apple would still ripple straight through Berkshire's results, given how large the stake remains.

Apple is not yesterday's story for Berkshire, no matter how much attention the Alphabet purchase draws. It is still the backbone of the portfolio, compounding through buybacks and anchoring everything around it. To me, that is the real lesson here: a truly great business can keep rewarding you long after the headlines have moved on to the next shiny object. For patient investors, that is worth remembering the next time a company you own drifts out of the spotlight: silence is not the same as stagnation, and the best holdings often do their finest work while no one is paying attention.

American Express is an advertising partner of Motley Fool Money. Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.