One fund manager I keep a close eye on is Terry Smith. Often referred to as ‘Britain’s Warren Buffett’, he has an exceptional long-term performance track record in the stock market, having delivered a return of around 15% a year since he launched his Fundsmith Equity fund back in 2010.
Recently, Fundsmith filed its 13F report with US regulators, revealing the US stocks Smith bought and sold in the first quarter of 2024. And the big takeaway for me was that in Q1, Smith was buying Magnificent Seven stock Apple (NASDAQ: AAPL).
Terry Smith’s recent buying activity
Apple’s not a new holding for Fundsmith. For around a year-and-a-half now, Smith has had a small position in the company.
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The recent 13F filing shows that he increased the size of his holding in Q1 however. During the period, the fund manager snapped up 262,959 shares (around $50m worth of stock at today’s share price) in the iPhone maker. This increased the size of his position by 19.7%.
It’s worth noting that even after this recent buying activity, Apple’s still a relatively small holding for Smith. At the end of the quarter, the tech stock represented just 1.07% of his portfolio. So he hasn’t gone ‘all in’ on it yet.
I also bought Apple shares
I find this trading activity quite interesting though. That’s because I made a very similar move in Q1.
Back in March, when Apple shares were under pressure and trading around the $170 level, I snapped up a few more of them for my portfolio.
Buying the dip has paid off. Since then, the stock has rallied to around $190 after the tech giant announced the largest-ever share buyback.
A core holding in my portfolio
Now for me, Apple is more of a ‘core’ holding. Currently, it’s the fourth-largest individual stock position in my portfolio.
The stock isn’t perfect. Right now, Apple isn’t generating a lot of revenue growth. Meanwhile, the company’s valuation remains quite elevated (the forward-looking P/E ratio is 29).
However, I’m confident in the long-term story here. Sooner or later, we’re likely to see Apple release AI-enabled iPhones (it’s currently in talks with OpenAI to put ChatGPT on its phones). When this happens, I think we’re likely to see the largest product refresh cycle in at least five years. This could put a rocket under revenues.
Another reason I’m bullish is that the company has moved into the payments and digital healthcare markets. These are two industries with enormous long-term growth potential. I’m personally using Apple Pay for purchases more and more these days.
There are risks here, of course. One is increasing competition in China, where there are some really innovative players in the smartphone market. This could lead to lower growth for Apple and a contraction in the valuation.
However, by buying shares on the dip – as I have always done with Apple – I can potentially reduce my risk with the stock.
