For the love of Apple, Warren Buffett embraces loss in billions as iPhone maker's shares sink

Time after time, the Oracle of Omaha Warren Buffett has made it clear that the stock which is dear to him is iPhone maker Apple’s shares. Another one would be Coca Cola.  However, for the love of Apple, looks like the ace investor is embracing for massive impact. Infact, the stock which was a boon to Buffett just three months ago, has now become a nightmare as his Berkshire Hathaway logs billions of losses deriving from Apple shares. What is noteworthy is that, Buffett’s faith Apple is unshakable. To your surprise, Buffett is among those investors who are eyeing Apple’s share drop in price even further, so that he can make purchases in the company once again.

Apple, which is one-of-a-kind stock on exchanges, has dropped by nearly 37% on Nasdaq in just last three months (between October to December) of 2018. The beginning of 2019 was gloomy for Apple, as on Thursday it finished lower by nearly 10% at $142.19 on the index.

In fact in just three days of 2019, Apple 10% compared to its last trading price of $157.74 on December 31, 2018. This is not a good opening of 2019 for Buffett. 

According to a Forbes report, in the fourth quarter, Berkshire Hathaway is likely to post a paper loss on its investments of over $25 billion, putting the conglomerate’s investment portfolio deeply in the red for the year. For 2018, Berkshire is likely to record paper losses well in excess of $10 billion on a portfolio that opened the year at $170.5 billion in size.

Reportedly, FactSet pegs Berkshire’s total costs basis in Apple—a position that was tens of billions of dollars in the green as recently as October—at its current trading price.

Firstly, the reason behind lackluster 2019 opening in Apple shares can be credited to revenue expectations cut by the company for first quarter of this year to $84 billion as against previous estimates of $89 – $93 billion.

What has happened is that, Buffett’s wealth which reportedly stood over $36 billion in Apple, jumped to nearly $60 billion when the company made its $1 trillion mark. But that glorious day was short lived as now Apple’s foggy growth outlook as forced investors to remove their money in the company and as an aftershocks has wiped out massive gains of Berkshire Hathaway.

The positive outlook in Apple ahead is already a big bold question mark, and many analysts have now started to believe that Buffett would be one investor to lose some billions ahead.

Meyer Shields, an analyst at Keefe Bruyette & Woods, said in a Thursday note to Forbes,  that Apple’s recent drop could shave 8% from Berkshire’s book value per share.

This impact is already witnessed in Buffett’s wealth on Thursday, as the Forbes Real Time Billionaire ranking showed that the investor saw massive drop in net worth in just one day. Not only Apple, but even Berkshire dropped by nearly 6%, taking Buffett’s wealth down by $4.3 billion on Thursday.

During the third quarter of 2018, Buffett through Berkshire Hathaway increased his holding in Apple Inc by another 522,802 shares. Now, Berkshire has about 252.5 million of Apple shares. Notably, Apple accounts for about 25.77% of Berkshire’s portfolio, which was higher compared to 23.84% in previous quarter, as per Investor’s Business Daily.

Apple found favor in eye of Buffett way back in 2016, when the company’s stock was trading between $93 and $110. During the period over the $1 trillion mark, it was surely, Buffett who made some big money from Apple.

Considering Buffett is an investor who works against the odd of market sentiments and does not let him affect on periodical changes, looks like he is ready to bear some losses.  

On Wednesday, Buffett told CNBC’s “Squawk Box", "We bought about 5 percent of the company. I’d love to own 100 percent of it. ... We like very much the economics of their activities. We like very much the management and the way they think."

Not only this, Buffett once told in 9TO5MAC report, “I don’t focus on the sales in the next quarter or the next year. I focus on the hundreds and hundreds and hundreds of millions of people who practically live their lives by it,” Buffett said referring to the iPhone. “And if you look at that little piece of whatever it is, it’s some of the most valuable real estate in the world.”