Buffett buys more Apple

Legendary investor Warren Buffett told CNBC on Monday that his Berkshire Hathaway (BRK.A) group almost doubled its stake in Apple (AAPL) to 133 million shares worth around $17 billion.

‘Investors, on average and over time, will do better with a low-priced index fund than with a group of funds of funds’.

Buffett has often said he believes most stock investors are better off with low-priced index funds than paying higher fees to managers who often underperform. Buffett challenged the asset manager to pick a group of hedge funds that it thought would beat an S&P 500 Index fund over 10 years. He said a $1 million investment in hedge funds would have generated a $220,000 gain in the nine years through 2016, compared with the index fund’s $854,000 increase. He plans to donate the money to Girls Incorporated of Omaha, a charity.

Berkshire Hathaway has roughly 367,700 employees, and Buffett expects at least 100,000 of them to participate in the contest. Meanwhile, operating earnings were $2,665 a share, falling short of expectations of $2,717.

These included businesses such as the BNSF railroad and Geico auto insurance that posted weaker results last quarter. “Ever-present naysayers may prosper by marketing their gloomy forecasts”.

Companies that regularly leave out what they call “restructuring costs” and “stock-based compensation” from their expenses, boosting profits by deviating from standard accounting practices made him nervous, he said.

Investment manager Cole Smead said he felt that Buffett spent too much of the letter extolling Berkshire’s virtues instead of talking about how he’ll approach investing the company’s $86 billion cash or what went wrong with the failed $143 billion bid for Unilever that Berkshire took part in with 3G Capital. Revenue for the full year rose by 6% to $223.6 billion.

For all of 2016, profit was virtually unchanged, dropping to $24.07bn from $24.08bn. That’s more than double the stake that Berkshire revealed earlier this month and has a value of more than 17 billion dollars. So Buffett said most investors are better off not trying.

Berkshire nows owns about 2.5% of Apple, making it the company’s 2nd largest holding (behind Coca-Cola).

Berkshire Hathaway never commits to holding a security, says Mr. Buffett.

He said he had invested about $20 billion in stocks since shortly before the election. But he also said it’s hard to identify those who can. “One word sums up our country’s achievements: miraculous”. That was over a 10 percent increase from the previous year. Both were record closing highs. Over the same period, the S&P 500 has returned with dividends included 9.7 percent.

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