Buffett’s Apple vs. Watsa’s Bl
Using the new Equity Comparison Chart, a premium feature of GuruFocus, users can compare the financial strength and profitability metrics of multiple companies in a single chart. For example, users can take commercial grade measurements for Apple Inc. (AAPL, financial), the first participation of
Warren Buffett (Business, Portfolio) of Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, financial) and compare them with BlackBerry Inc. (BB, Financial), the second largest participation of
Prem Watsa (Business, Portfolio) ‘s Fairfax Financial Ltd. (TSX: FFH, Financial).
Known as the “Oracle of Omaha,” Buffett studied with Benjamin Graham at Columbia University in the 1950s. His insurance conglomerate seeks to invest in companies using a four-criteria approach: understandable business, favorable growth prospects, shareholder-friendly management and attractive valuations.
In June 2021, Buffett’s $ 293.02 billion equity portfolio held a 41.46% weighting in Apple Inc. (AAPL, Financial), its largest participation.
After the meeting
Francois Chou (Trades, Portfolio) In 1985, Watsa learned that Buffett was making money using the insurance float. Using a similar approach, Fairfax emphasizes a conservative value investing philosophy, seeking to invest assets on a total return basis.
In June 2021, Fairfax’s $ 3.11 billion equity portfolio held an 18.37% weighting in BlackBerry (BB, Financial), his second largest participation.
Apple, the Cupertino, California-based tech giant, designs and manufactures a wide range of consumer electronics like the iPhone, Apple Watch, and Mac, and provides services like Apple Music and iCloud.
Likewise, BlackBerry started out as a smartphone maker, but now focuses primarily on cybersecurity and Internet of Things software products.
New GuruFocus Stock Comparison Chart Allows Users to Do Side-by-Side Benchmarking
As shown in Figure 1, users can open the Action Comparison Table by clicking on the “Action Comparison Table” item under the GuruFocus Tools tab. Figure 2 shows an example of a blank comparison table.
Users can add actions to the board using the “Add ticker” field. The user can also load a wallet from “My wallets” or from a saved table by clicking on the “Open” button. Figure 3 shows an example table with Apple and BlackBerry along with some evaluation metrics. Rating metrics can be added by clicking “Rating” under the GuruFocus Views tab.
Users can add metrics to the table using the “Add Metrics” field. The table supports current analysis and historical analysis. For example, we can add the field “Price-to-GF Value”, which calculates the ratio between a company’s share price and its valuation based on GuruFocus’s proprietary valuation method. Figure 4 shows the table with the Price-to-GF Value field added.
As shown in Figure 4, both Apple and BlackBerry are significantly overvalued based on Friday’s GF price / value, although Apple is slightly less overvalued at 1.33 times the GF value.
Comparison of financial strength
According to the stock summary page, key indicators of financial strength include cash-to-debt ratio, debt-to-equity ratio, interest coverage ratio, and Altman’s Z score. Figure 5 illustrates the table with the added financial strength measures.
Users can save the table by clicking the “Save” or “Save As” items under the “Save” tab. Figure 6 illustrates this, in which we name the table as “Financial strength and valuation”.
As shown in Figure 5, Apple’s financial strength is slightly better than BlackBerry’s. Even though Apple’s cash-to-debt ratio is lower than BlackBerry’s, Apple has a higher interest coverage ratio and a higher Altman Z score.
GuruFocus ranks Apple’s financial strength 5th out of 10 due to debt ratios below more than 95% of its global competitors, despite a strong Altman Z score of 7.45 and an interest coverage ratio exceeding 61%. global computer hardware companies.
Since key profitability metrics involve trends in a company’s profit margins and revenue growth, users can compare profitability metrics using the “Historical Analysis” section of the comparison table, such as shown in figure 7.
Users can sort the table by the “Metrics” column to group the metrics separately. Additionally, users can open the “Browse” button to search for a specific metric in the financial terms pages. Users can also export the table to Excel using the “Export to Excel” item under the Export tab.
The Frequency button allows the user to display quarterly, annual or last 12 months data in the comparison table when scrolling to the right. Figure 8 shows an example screenshot for historical data.
As shown in Figure 7, Apple has experienced positive revenue growth rates over the past three, five, and ten years, while BlackBerry revenue has declined on average. Despite this, BlackBerry had positive gross and operating margins, while Apple’s margins declined slightly on average.
GuruFocus ranks Apple’s profitability 8th out of 10 thanks to a high Piotroski F-score of 7 and an operating margin that outperforms over 96% of global competitors despite falling around 4.3% per year in average over the past five years.
On the flip side, GuruFocus ranks BlackBerry 2 out of 10 profitability on the back of profit margins and lower returns than over 78% of global competitors.
While the stock comparison chart suggests that Apple has higher business quality than BlackBerry, there are several other risks and factors that need to be considered in order to determine which stock is the best investment. Investors should always do their own research before investing in the stock market.