[Apple Shockwave] Warren Buffett's New Partner Tim Cook

Buffett Praises Apple Extensively
Cook Responds with Berkshire Annual Meeting Attendance and Share Buybacks

The relationship between Warren Buffett, chairman of Berkshire Hathaway, and Tim Cook, CEO of Apple, is newly emerging. Buffett, who was once obsessed with candy and cola companies, now openly praises the CEO of the world's top technology company.

Apple CEO Tim Cook celebrated Warren Buffett's 90th birthday by sharing a photo of the two together at the Apple headquarters on X (formerly Twitter). Photo by Tim Cook on X

The Berkshire Hathaway shareholders' meeting, known as the "Woodstock of the capital markets," was held on the 4th in Buffett's hometown of Omaha. As it was the first shareholders' meeting after the death of Buffett's close friend Charlie Munger, more attention than ever was focused on Buffett.

However, the real scene-stealer at this shareholders' meeting was Apple and CEO Tim Cook. While Bill Gates, founder of Microsoft (MS), has often appeared at the meeting alongside his longtime friend Buffett despite their age difference, why did Apple's CEO appear at Berkshire's shareholders' meeting?

Berkshire Hathaway is the largest shareholder of Apple. Buffett, who follows the principle of "not investing in companies I don't understand" and has been reluctant to invest in information technology (IT) even in the internet and AI era, has steadily purchased Apple stock. Apple is Berkshire's largest investment. However, just before the shareholders' meeting, Berkshire announced it had sold 13% of its Apple shares. Since Berkshire sold Apple shares consecutively for two quarters, there was enough reason to wonder if its stance on Apple had changed.

Apple CEO Tim Cook is arriving at Berkshire Hathaway's annual shareholders meeting held in Omaha on the 4th.
[Photo by Reuters]

Contrary to concerns, Buffett only praised Apple when asked about the stock sales. He said that the sale was to increase cash holdings by taking advantage of lower tax rates, but it indicated strong confidence in Apple. Buffett said, "We invest in great businesses like American Express and Coca-Cola, but we are investing in Apple, which is a better company than those." He described the iPhone as "probably the greatest product in history."

Buffett prefers companies with a strong consumer base. He perceives Apple, with its iPhone, iPad, AirPods, and MacBook, not as an IT company but as a consumer goods company with a powerful customer base.

Buffett even asserted that unless something unexpected happens, Apple will remain Berkshire's largest investment. He even predicted that the investment stance on Apple, American Express, and Coca-Cola would not change even if Greg Abel, whom he has named as his successor, becomes Berkshire's CEO. At this point, this is enough to offset the disappointing Apple earnings report that revealed sluggish iPhone sales.

Cook is also faithfully meeting Buffett's expectations. Before Berkshire's shareholders' meeting, Apple announced its earnings and emphasized a significant increase in dividends and share buybacks, supporting Buffett's preference for value investing. Cook said in an interview with the media at Berkshire's shareholders' meeting, "It is a privilege (privilege) that Berkshire is a shareholder." After Berkshire's announcement of Apple stock purchases in 2018, he had said he was "thrilled."

Cook's repeated praise of Buffett's leadership suggests he plays a role not only as a shareholder but also as a management mentor. Cook has continuously urged Buffett to use the iPhone and even offered to visit Omaha to personally teach him. Buffett, who had insisted on using a feature phone, has been using the iPhone since the iPhone 11.

The relationship between Cook and Buffett is solid. In 2020, Cook celebrated his birthday by sharing a photo on Twitter taken with Buffett at Apple's headquarters. The photo is presumed to be from when Buffett visited to learn how to use the iPhone from Cook. Buffett revealed in an interview that he once asked Cook, "What is an app (APP)?" which embarrassed Cook.

Buffett also supports Cook. In a 2020 interview with Yahoo Finance, Buffett referred to Cook and Apple as "a company run by the greatest manager in history." He added, "Cook was underrated for a while, but now his true nature is being revealed."

This year's stock market star is undoubtedly Nvidia, backed by AI. Apple experienced stock price sluggishness due to criticism of its slow AI response. Nevertheless, unless Nvidia transforms into a consumer goods company, it seems difficult for Buffett and Berkshire to invest in it.