- Warren Buffett invested in Apple after hearing how upset a friend was about losing his iPhone.
- A Berkshire Hathaway manager said leaving the device in a cab was like losing a piece of your soul.
- Buffett realized the iPhone looked more like Kraft Macaroni & Cheese than a computing device.
Warren Buffett owes his phenomenal Apple investment in part to a friend who left his iPhone in the back of a taxi, a new book reveals.
David “Sandy” Gottesman, manager of Buffett’s Berkshire Hathaway, suffered a devastating loss when his iPhone slipped from his pocket during a taxi ride in 2016.
“I felt like I lost a piece of my soul,” the nonagenarian told Ted Weschler, one of Buffett’s assistants and a longtime Apple fan. The anecdote appears in “After Steve: How Apple Became a Trillion-Dollar Company and Lost its Soul,” written by Wall Street Journal reporter Tripp Mickle.
Weschler shared Gottesman’s story with Buffett, who was surprised to learn that a friend of his was so enamored with the device at his age. The Berkshire chief, who avoids tech companies because they are outside his “circle of competence”, decided to take a closer look at Apple.
Buffett noticed how obsessed people had become with their smartphones, including his grandchildren during their weekly trips to Dairy Queen. He determined that the iPhone was indispensable to many people, and would be for a long time.
“He realized that Weschler was right: the iPhone wasn’t a technology, it was a modern-day Macaroni & Cheese Kraft,” Mickle writes in his book.
Weschler had already built a $1 billion position in Apple in Berkshire, but Buffett piled another $35 billion into the stock over the next two years. The conglomerate has more than tripled its money since then, with its stake soaring in value to $133 billion. Apple is by far the most valuable holding in Berkshire’s portfolio today, and Berkshire is Apple’s largest individual shareholder.
Buffett ranked Apple among the best companies he knows. He featured the company as one of Berkshire’s “big four” in his latest annual letter, along with its insurance businesses, the BNSF Railway and Berkshire Hathaway Energy.
Notably, the investor increased Berkshire’s stake in Apple last quarter to about 911 million shares, or about 5.6% of the company.