‘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:

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

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »