Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 19
"If Apple really wants to buy Apple shares, they should buy them as cheaply as possible. Pick the time and method that best meets that goal.
Near as I can figure, the best way at the moment would be to buy Berkshire stock."
interesting exercise but not realistic. Berkshire could reduce or sell their position at any time.

Well, arguably that would be even better for Apple : )
If you think today's Apple price is a bit on the high side...say, offering no obvious reason to expect upside in the
next few/several years...then if Apple owns Berkshire, and Berkshire sells some Apple shares at a high price, then Apple does even better!
It's reasonably likely some years later they could sell the Berkshire shares at a profit and buy Apple shares more cheaply (at least in relative terms) than they could today.

Apple buys Berkshire shares at a discount, which contain Apple shares trading at a premium that gets realized.
Cupertino has another claim to genius!

But as you say, of course it's not particularly realistic.

Still--a firm with a lot of cash can do only so many different things with it.
In no particular order:
0. Let it pile up as cash and wait for a more obvious answer.
1. Invest it in their own business (or adjacent businesses) at good rates of return.
2. Invest it in their own business (or adjacent businesses) at so-so rates of return.
3. Invest it in their own business (or adjacent businesses) at bad or negative rates of return.
4. Acquisitions at prices offering decent returns.
5. Acquisitions at prices that destroy value.
6. Pay a dividend.
7. Buy back shares at a discount.
8. Buy back shares at a premium.
9. ...or invest the money in some financial asset that will earn a decent return.

Berkshire Hathaway itself went from #3 to #9 in the 1960s it worked out well for ages, recently accompanied by some #7.
Apple spent a lot of time at #0 before settling on a bit of #6 and a lot of #7, but #7 isn't available right now.
They fortunately skipped #5, which was once one of Microsoft's habits. They seem intent on #8 at the moment, which isn't so good.
So, hey, why not try #9?

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.