Gates Foundation Likely to Be Rewarded for Apple Stock Buy

As the markets recover, Apple Inc. (NASDAQ: AAPL) is back near its all-time highs. Apple stock is easily one of the most popular in the world. It has been a staple of many portfolios over the past decade and even longer.

With the exception of perhaps Tesla Motors (NASDAQ: TSLA) or Amazon (NASDAQ: AMZN), Apple is one of the most subscribed companies in the stock market. Apple’s market cap easily surpasses $1 trillion, and it is a large part of why the S&P 500 has recovered so much. The same goes for the Dow Jones industrial average as Apple is currently the highest priced stock in that index.

While the markets have been flying in Apple’s jetstream since the coronavirus pandemic hit, investors have been catching a ride too. In fact, one incredibly large investor–the Bill & Melinda Gates Foundation Trust–bought into the iPhone maker during the first quarter.

Back on Track

Apple recently gave an update on its retail locations and its plans to reopen. So far the company has reopened over 100 stores across the world, with locations in the United States quickly following suit.

Apple has just announced that it will be opening roughly 130 stores in the U.S. over the coming week. Note that there are over 500 locations worldwide, with 271 located domestically.

These reopenings rely more heavily on local coronavirus trends than macro trends. At the same time, Apple is implementing appropriate safety and regulatory measures. This is a step in the right direction, although there may be some near-term pain.

Many analysts are writing off the calendar second quarter of 2020, if not the full year. Problems related to the coronavirus will persist, but Apple is putting its best foot forward and investors are optimistic–especially one of its newest and biggest investors.

Opening the Flood Gates

Apple is a staple of practically every Wall Street portfolio–minus a few bears. It’s impossible to find an analyst who doesn’t have an opinion on this tech giant. The markets have been peak Apple for a while and this doesn’t seem to be changing anytime soon.

Even Warren Buffett has come around in recent years to invest a sizable fortune in Apple. Historically, Buffett has stayed away from tech stocks but Apple was too good of a value proposition to pass up. Currently Buffett owns about a 5.66% stake in Apple, or 245.1 million shares.

Another major player got into Apple recently as well. According to an SEC filing, the Gates Foundation bought 501,044 Apple shares during the first quarter. As Apple stock is currently holding near its all-time high, this investment is already profitable, it’s just a question of how profitable.

The Gates Foundation was established in 2000, and it currently holds over $40 billion in assets. Some of the Foundation’s other notable holdings include Amazon (60,460 shares), Alibaba (NYSE: BABA) (552,383), Caterpillar (NYSE: CAT) (11,260,857), Twitter (NYSE: TWTR) (272,420), and Walmart (NYSE: WMT) (11,603,000).

Even Apple Is Buying Apple

As Apple is getting back to business and reopening its retail locations, the stock should continue to rise. What made Apple so resilient in the first place was its incredible balance sheet, which offered security to many investors.

At the end of the fiscal second quarter, Apple’s assets included $40 billion in cash and cash equivalents and $53.9 billion in marketable securities. At the same time, among noncurrent assets, Apple had $98.8 billion in marketable securities.

So what is Apple going to do with this big stack of cash? Management has decided to go the route of paying out dividends and buying back stock. In the most recent quarterly report, Apple announced that it will be conducting a buyback of $50 billion of its common stock.

Even at all-time highs, Apple management is suggesting that its stock may still be undervalued. A repurchase plan of this size will only lift shares from here. Investors, including the likes of Buffett and Gates, have to be happy with the direction of the stock.