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One fund manager I follow closely is Terry Smith. Often referred to as the “British Warren Buffett”, he has an exceptional track record of long-term returns in the stock market, having returned around 15% annually since he launched his Fundsmith Equity fund in 2010.
Recently, Fundsmith filed its 13F report with US regulators, revealing the US stocks that Smith bought and sold in the first quarter of 2024. And the most important thing for me was that in the first quarter, Smith was buying shares of Magnificent Seven. Apple (NASDAQ:AAPL).
Terry Smith's recent purchasing activity
Apple is not a new entry for Fundsmith. For about a year and a half, Smith has held a small position at the company.
However, the recent 13F filing shows that it increased its stake size in the first quarter. During the period, the fund manager acquired 262,959 shares (about $50 million at current share prices) of the iPhone maker. This increased his position size by 19.7%.
It's worth noting that even after this recent buying activity, Apple remains a relatively small holding for Smith. At the end of the quarter, technology stocks represented just 1.07% of his portfolio. So he still hasn't done his best to do it.
I also bought Apple stock.
However, I find this business quite interesting. This is because I made a very similar move in the first quarter.
In March, when Apple stock was under pressure and trading around the $170 level, I bought a few more for my portfolio.
Buying during the dip has paid off. Shares have since risen to around $190 after the tech giant announced the largest share buyback in its history.
A core holding in my portfolio
Now, to me, Apple is more of a “core” holding. It is currently the fourth largest individual stock position in my portfolio.
The action is not perfect. Right now, Apple isn't generating much revenue growth. Meanwhile, the company's valuation remains quite high (forward P/E ratio is 29).
However, I am confident in the long-term story. Sooner or later, we'll likely see Apple launch ai-enabled iPhones (it's currently in talks with OpenAI to put ChatGPT on its phones). When this happens, I think we are likely to see the largest product refresh cycle in at least five years. This could boost revenue.
Another reason I'm optimistic is that the company has entered the digital healthcare and payments markets. These are two industries with enormous long-term growth potential. Personally, I'm using Apple Pay more and more for purchases these days.
Of course, there are risks here. One of them is the growing 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 valuation.
However, by buying declining stocks, as I have always done with Apple, I can potentially reduce my risk with the stock.
