The Apple of Warren Buffett’s eye
On May 3, Warren Buffett announced his retirement. Here’s my dictation (abbreviated) of his announcement:
“The time has arrived where Greg should become the CEO of the company at year end, and I want to spring that on the directors effectively [of Berkshire Hathaway]”.
Buffett then added, “I would still hang around and conceivably be useful in a few cases”, and, “I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity, I think Berkshire has a special reputation that when there’s times of trouble for the government that we are an asset and not a liability.”
Great opportunity? Those words, combined with a holding of more than US$360 billion in cash – in part due the sale of Apple shares – are potentially a hint that Buffett sees something on the horizon he is hanging around for, prepared to help with, and has a built a war chest for.
But this blog post is not about inferring another correction from Buffett’s announcement. This blog post is about those Apple shares.
Buffett’s retirement will leave a gaping hole in future investment literature. His annual letter to shareholders has been a source of ideas, inspiration and comfort for many. The library of past letters is a treasure trove of wisdom, blending folksy insights with candid reflections on markets and on Buffett’s mistakes.
In the 2025 letter, Buffett emphasised his long-term investment horizon, often spanning decades, and his disregard for academic credentials when selecting CEOs. He also highlighted a key principle: a single winning decision can transform outcomes, while mistakes often fade into irrelevance. As Buffett put it, “Our experience is that a single winning decision can make a breathtaking difference over time. Mistakes fade away; winners can forever blossom”.
This philosophy is vividly illustrated in Berkshire’s investment history, particularly over the last decade. As several analysts and commentators have recently pointed out, while Buffett’s 60-year-plus track record is legendary, Berkshire’s performance from 2016 to 2025 has more closely mirrored the S&P 500. A US$10,000 investment in Berkshire in 2016 would be worth US$35,000 by January 2025, compared to US$34,000 for the S&P 500 (Morgan Stanley Research, 2025). It should be noted Berkshire has delivered its return with less volatility and therefore better downside protection than the index.
Berkshire’s major moves: hits and misses
Let’s examine Berkshire’s key investments from the past decade to understand what has contributed to its performance:
Kraft Heinz: In 2015, Berkshire acquired a 25 per cent stake in Kraft Heinz post-merger. The investment soured, with the stock plummeting 50 per cent over five years, culminating in a US$15 billion write-down in 2019. Buffett admitted, “We overpaid for Kraft,” labelling it a misstep (Buffett, 2019 Berkshire Hathaway Shareholder Letter).
Precision Castparts: Berkshire’s US$32 billion acquisition of Precision Castparts in 2016 was another costly error. By 2020, a US$10 billion goodwill write-down was necessary due to weakened aerospace demand, with Buffett conceding he overpaid (Buffett, 2020 Berkshire Hathaway Shareholder Letter).
Airlines: In 2016, Buffett threw decades of advice about avoiding airline stocks out the window and invested US$8 billion across four major U.S. airlines, reversing his prior scepticism about the sector. The bet faltered, and by early 2020, Berkshire exited these positions at an estimated US$4 billion loss amid the pandemic’s impact.
Apple: The standout success came in 2016 when Berkshire co-portfolio manager Todd Combs persuaded Buffett to invest in Apple. Berkshire spent US$31 billion over two years to acquire a five-per cent stake. Apple’s stock surged over 700 per cent by 2023, growing Berkshire’s position to US$175 billion – an unrealised gain of US$140 billion.
(Here at the blog we suggested Apple could be a buy in 2010 here)
Quantifying Apple’s portfolio contribution
Apple’s extraordinary performance was pivotal to Berkshire’s ability to keep pace with or slightly outperform the S&P 500. To illustrate, consider Berkshire’s returns with and without Apple from 2016 to 2023 (excluding 2024 due to Berkshire’s partial sale of Apple):
2016-2023 with Apple:
Berkshire: 174 per cent
S&P 500: 168 per cent
2016-2023 without Apple:
Berkshire: 142 per cent
S&P 500: 168 per cent
Over a longer horizon, the disparity is even starker:
2004–2023 with Apple:
Berkshire: 542 per cent
S&P 500: 537 per cent
2004–2023 without Apple:
Berkshire: 442 per cent
S&P 500: 537 per cent
These figures reveal that without Apple, Berkshire would have significantly underperformed the S&P 500 over both 10 and 20-year periods (Morgan Stanley Research, 2025).
A single stock pick – Apple – generated all the outperformance for a conglomerate that owns over 70 companies and holds more than 50 stock positions.
Lessons from Buffett’s playbook
Buffett’s recent decade highlights the power of a single winner. As Charlie Munger once quipped, “Just hold the goddamn stock.” Apple’s success didn’t just offset Berkshire’s losses; it propelled the firm to match or exceed market returns. For everyday investors, Buffett’s experience suggests that while stock-picking is fraught with risk, a single well-chosen investment can outweigh numerous errors – if you have the patience to hold it.
And irrespective of recent performance, we will certainly miss those annual Berkshire letters to shareholders.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
