Public to Private Companies - Apple
In a way, it’s like Apple (NASDAQ:AAPL) has already decided it wants to be on the list of private companies. It doesn’t make splashy M&A purchases, rakes in billions of dollars in profit each quarter and has massive free-cash flow.
Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) is a huge buyer of Apple too. The Oracle of Omaha continues to gobble up millions of shares, buying over 75 million in the first quarter of 2018.
It’s now his largest position and given that Berkshire has more than $100 billion to invest, Buffett may just keep going where he feels most comfortable.
One reason he likes Apple? Its buyback, which is like a silent, unannounced go-private move. After mopping up billions in stock already, in May the tech giant announced a $100 billion repurchase plan.
That was fueled by the new tax system, but I wouldn’t be surprised to see Apple buy back at least $100 billion each year going forward.
Keep in mind, it just hit a $1 trillion market cap — not that InvestorPlace readers should be surprised. Even at today’s valuation, Apple’s still buying back 10% of the float. On a deep correction, it’s an even larger percentage.
As that buyback continues, the company will eventually retire a bulk of the stock, driving shares higher and higher. It’s like an unofficial privatization bid.
Source: Investor Place