Warren Buffett currently uses an iPhone 11 as his device of choice after years of being sent free ones by Tim Cook.
Warren Buffett still had a flip phone in 2008 when he received calls asking him to help bail out the banking system. He kept that same type of phone for the next 12 years until it was well-worn. Buffett was proud of his frugality in keeping the same old flip phone for so long and even bragged about it to an interviewer at the time.
Once a fan of the $20 Samsung SCH-U320 flip phone for its convenience and simplicity, Buffett uses Apple’s iPhone 11 model just to make calls. Billionaire Apple investor Warren Buffett finally traded in his $20 flip phone for an iPhone 11 in February 2020.
“My flip phone is permanently gone,” Buffett told CNBC’s Becky Quick during a “Squawk Box” interview in early 2020. However, he admitted he primarily uses the iPhone for phone calls only. His Twitter account has only tweeted seven times, and he said someone else did that for him. “I use it as a phone,” he said. He does not optimize the potential of the smartphone as he sees no need to use all the other apps. Buffett said in the past that he used an iPad to check stock prices and do research.[1]
It makes sense that Buffett would choose to own an iPhone as Berkshire Hathaway now owns approximately 5.8% of total outstanding Apple stock. His use of the iPhone fits in with his marketing philosophy of using the products of the companies he invests in publicly, much as he does with drinking Coca-cola and eating See’s Candy at the annual Berkshire Hathaway Shareholder Meetings.
His choice of smartphone now matches his significant investment in Apple, as it is approximately 38.9% of his Berkshire Hathaway Portfolio based on the latest 4th quarter 2022 13-f filing.
Why Warren Buffett Invested in Apple
Some critical reasons for Buffett’s love for Apple stock as an investment include:
Brand Strength: Apple has one of the world’s most influential and recognizable brands. The company is known for its innovative products, loyal customer base, and premium pricing. This strong brand value has enabled Apple to maintain high-profit margins and command a significant market share.
Durable Competitive Advantage: Apple’s hardware, software, and services ecosystem has created a durable competitive advantage. This ecosystem encourages customer loyalty and makes it more challenging for competitors to lure away Apple customers.
Strong Financials: Apple has a history of robust financial performance, with consistent revenue growth, high-profit margins, and strong cash flows. These financials allow the company to invest in research and development, make strategic acquisitions, and return value to shareholders through dividends and share buybacks.
Capital Allocation: Buffett admires Apple’s capital allocation strategy. The company has a history of efficient use of capital, investing in growth opportunities while returning cash to shareholders through dividends and share repurchases.
Management: Warren Buffett has often praised Apple CEO Tim Cook for his leadership and business acumen. Buffett believes that Cook has successfully carried on the legacy of Apple co-founder Steve Jobs and has continued to drive the company’s growth and innovation.
Long-Term Investment: Buffett’s investment philosophy is centered around identifying and holding businesses with solid fundamentals for the long term. Apple’s proven track record of innovation, financial strength, and competitive advantage aligns well with this philosophy.
Value: Buffett bought Apple at what he calculated was a reasonable price for such an excellent company. He saw the potential for buying a share of Apple’s future cash flows at a discounted price.
It’s important to note that these reasons are based on historical data and public statements made by Warren Buffett. Investors should always conduct their own research and consider their financial goals before making investment decisions.
Warren Buffett’s cell phone ownership is now 100% correlated with his investment in Apple stock.
