The below chart has been making the rounds on Twitter. It shows the percentage of the S&P 500 market cap which is held by the top 5 biggest stocks in the S&P 500. Currently the concentration in these five stocks is at 19%. This is not a record percentage as this percentage has been much higher in the past.
Currently these five stocks are: Microsoft, Apple, Amazon, Google & Facebook.
If you zoom in on just the two biggest stocks by market cap (Microsoft and Apple) the percentage of these two in the S&P 500 is almost 10%.
However, this chart shows that this concentration in just five stocks has been much higher in the past. In the 1960’s concentration was above 25%.
Berkshire Hathaway and Apple are currently the second and fifth company in the S&P 500 by weighting in the index. The market capitalisation for these companies are currently $ 980 billion for Apple and $525 for Berkshire Hathaway.
At this moment Warren Buffet’s Berkshire Hathaway holds a $ 50 billion stake in Apple. This position is 5% of the market capitalisation of Apple and more interestingly 10% of the market capitalisation of Berkshire Hathaway. The stake in Apple is 25% of Berkshire’s equity portfolio. Meanwhile Berkshire’s has hit the enormous amount of $ 122 billion in cash.
Berkshire’s performance over the years has been stunning, as I’ve posted before. In euro’s though, the performance is even more stunning the last decade since the effect of the dollar gaining in value has added to performance.
Apple has a lot of cash as can be seen on the bar graph below. But the problem is that most of it is outside of the U.S. They can’t use this cash to pay out as a dividend or buy back stock because then they first have a to pay a U.S. profit tax on the amount of cash. Only cash and investments held domestically in the U.S. can be used for this. It is one of the reasons why Apple decided to issue new debt to buy back stock instead of paying a tax in the U.S. to move their money from the offshore accounts to the U.S.
Apple’s Cash and Investments 2013 Q4
As you can easily see on this bar graph most of the cash and investment are held in offshore accounts.