Warren Buffett’s Berkshire Hathaway saw its shares hit a record high this week – despite its massive Apple stake tumbling in value

Warren buffett
Warren Buffett. Getty Images

  • Berkshire Hathaway stock hit a record high despite Apple shares falling 10% this year.
  • Warren Buffett’s company counts the iPhone maker among its biggest investments.
  • Berkshire’s “real economy” focus has made it a popular bet as the economy reopens.
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Berkshire Hathaway shares closed at a record high on Monday, despite Apple stock – one of its biggest investments – sliding 4% on the day.

Warren Buffett’s company owns a 5.4% stake in the iPhone maker, which accounted for about 44% of its $US270 ($350) billion US stock portfolio at the end of December. Apple’s stock price has slumped by 10% this year, wiping more than $US10 ($13) billion off the value of Berkshire’s position.

Yet Berkshire “B” shares have jumped 13% this year, outpacing the benchmark S&P 500 index’s 3.3% gain over the same period. The stock rally has boosted Berkshire’s market capitalization to $US593 ($770) billion.

The disconnect likely reflects Berkshire’s broad exposure to the “real economy.” The conglomerate owns scores of businesses including See’s Candies, Geico, and the Burlington Northern railway, and holds billion-dollar stakes in public companies such as American Express, Coca-Cola, and Kraft Heinz.

Berkshire’s exposure to those kinds of businesses meant it was hit hard by pandemic-driven lockdowns and business closures. However, it has now made the company a popular bet among investors seeking to cash in as the US economy reopens in the coming months.

Still, it’s surprising to see Berkshire shares climb to record highs while Apple stock tumbles. After all, Buffett described the iPhone maker as a “jewel” and one of Berkshire’s three most valuable assets, along with its insurance business and its railroad, in his recent annual letter.

Buffett may welcome the renewed interest in Berkshire after a difficult year for the company. The famed investor was fiercely criticized for taking cover during the early months of the pandemic and failing to deploy a chunk of Berkshire’s vast cash reserves, as he did during the financial crisis.

Instead of snapping up bargains, Berkshire dumped its stakes in the “big four” US airlines and slashed its financial holdings in the second quarter of 2020. However, it shifted gears in the second half of the year, ramping up stock buybacks to record levels and spending billions on stakes in Chevron, Verizon, drug companies, Japanese trading houses, and other assets.