Legendary investor Peter Lynch kicks himself for missing Apple when even tech skeptic Warren Buffett bought the stock years ago
REUTERS/Jim Bourg
- Peter Lynch regrets not investing in Apple when even tech-skeptic Warren Buffett saw its potential.
- The famed stock picker noted the iPod's large profit margins and Apple's strong finances years ago.
- Buffett's company counts its $150 billion Apple stake as the top holding in its stock portfolio.
Peter Lynch kicked himself for not investing in Apple years ago when even Warren Buffett, a longtime skeptic of technology companies, spotted the iPhone maker's potential and bought its stock.
"How dumb was I?" the legendary stock picker said during a CNBC interview on Tuesday.
"He bought Apple," Lynch said about Buffett, the 92-year-old investor who runs Berkshire Hathaway. "Apple was not that hard to understand."
Lynch delivered an annualized return of 29% over 13 years as the manager of Fidelity's Magellan fund, and grew its assets under management from about $20 million in 1977 to $14 billion by 1990.
The "One Up on Wall Street" author recalled his daughters once bought an iPod for about $250. He remembered thinking at the time that Apple was probably making a $200 profit on each music player it sold, and the company had a solid balance sheet.
"I should have done some work on Apple," Lynch said, noting it wasn't a complicated business and the iPod paved the way for the iPhone.
Berkshire plowed about $36 billion into Apple between 2016 and 2018. The stock has more than tripled since then, boosting the value of its stake to about $150 billion.
Buffett's company ranks among Apple's biggest shareholders with a roughly 5.8% stake. It also counts Apple as easily the most-valuable holding in its $300 billion stock portfolio.
The Berkshire chief has labeled Apple a"family jewel" and "probably the best business" he's come across, and praised CEO Tim Cook as one of the best managers in history. He's also noted that he doesn't understand all the technical elements of Apple devices, but he recognizes how desirable and indispensable they are to customers.
"We'll never own a business that makes so many people happier and is so useful for them," Buffett said recently, adding that most Apple fans would turn down a $10,000 offer to give up their iPhone and never buy another one.
Along with Apple, Lynch said he regretted not taking a closer look at Nvidia. Shares in the graphics-chips giant have more than quadrupled in price since the start of 2020.
The veteran investor also complained that many people do more research before they buy a refrigerator or a plane ticket than before they make a $10,000 investment. He urged them to understand what a company does before buying its shares.
Separately, Lynch predicted more banks will fail if a financial crisis takes hold, and disclosed that he doesn't own any cryptocurrencies.