‘Britain’s Warren Buffett’ just bought 262,959 shares of this magnificent stock

In the first quarter of 2024, Fundsmith portfolio manager Terry Smith (aka the UK’s ‘Warren Buffett’) was buying this blue-chip stock.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Apple and Fundsmith Equity. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

Just released: our top 3 small-cap stocks to consider buying in October [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

This FTSE stock is up 20% and set for its best day ever! Time to buy?

This Fool takes a look at the half-year results from Burberry (LON:BRBY) to see if the struggling FTSE stock might…

Read more »

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »