BRKB overlap with VTSAX overweight AAPL?

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sabtastic
Posts: 188
Joined: Tue Dec 03, 2013 12:00 am

BRKB overlap with VTSAX overweight AAPL?

Post by sabtastic »

I was hoping to find an answer to a question that has been bugging me lately.

I noticed that Berkshire Hathaway Inc. is the 5th largest holding in VTSAX. I also know that this company holds a lot of Apple and other major US companies which are also in the top holdings.

My question is, because companies like BRKB own portions of companies like AAPL, we are owning more Apple than we realize by purchasing this index or do the index masters account for this when they make the allocations?

Obviously im not changing any investment strategy based on this, but I am curious.
Valuethinker
Posts: 49030
Joined: Fri May 11, 2007 11:07 am

Re: BRKB overlap with VTSAX overweight AAPL?

Post by Valuethinker »

sabtastic wrote: Thu Oct 18, 2018 8:50 am I was hoping to find an answer to a question that has been bugging me lately.

I noticed that Berkshire Hathaway Inc. is the 5th largest holding in VTSAX. I also know that this company holds a lot of Apple and other major US companies which are also in the top holdings.

My question is, because companies like BRKB own portions of companies like AAPL, we are owning more Apple than we realize by purchasing this index or do the index masters account for this when they make the allocations?

Obviously im not changing any investment strategy based on this, but I am curious.
Yes but it's not huge.

I don't have time to check but let's say Apple is 3% of S&P 500. And BH owns 5% of Apple.

Then the additional holding in AAPL is .05 x 0.03 = .0015 i.e. 0.15%. Not huge.

I think BH owns something like 10% of Amex so that might be 0.1% additional. That's one of their largest holdings, from memory.

Your big exposures in owning BH are: insurance (it's classified as an insurance company in some listings) ; electric utilities; railways; consumer staples.
aristotelian
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Joined: Wed Jan 11, 2017 7:05 pm

Re: BRKB overlap with VTSAX overweight AAPL?

Post by aristotelian »

No, because the index owns BRK at its market weight with its AAPL stake priced in.
bgf
Posts: 2085
Joined: Fri Nov 10, 2017 8:35 am

Re: BRKB overlap with VTSAX overweight AAPL?

Post by bgf »

Valuethinker wrote: Thu Oct 18, 2018 9:09 am
sabtastic wrote: Thu Oct 18, 2018 8:50 am I was hoping to find an answer to a question that has been bugging me lately.

I noticed that Berkshire Hathaway Inc. is the 5th largest holding in VTSAX. I also know that this company holds a lot of Apple and other major US companies which are also in the top holdings.

My question is, because companies like BRKB own portions of companies like AAPL, we are owning more Apple than we realize by purchasing this index or do the index masters account for this when they make the allocations?

Obviously im not changing any investment strategy based on this, but I am curious.
Yes but it's not huge.

I don't have time to check but let's say Apple is 3% of S&P 500. And BH owns 5% of Apple.

Then the additional holding in AAPL is .05 x 0.03 = .0015 i.e. 0.15%. Not huge.

I think BH owns something like 10% of Amex so that might be 0.1% additional. That's one of their largest holdings, from memory.

Your big exposures in owning BH are: insurance (it's classified as an insurance company in some listings) ; electric utilities; railways; consumer staples.
and cash :wink:
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
Topic Author
sabtastic
Posts: 188
Joined: Tue Dec 03, 2013 12:00 am

Re: BRKB overlap with VTSAX overweight AAPL?

Post by sabtastic »

Thanks everyone. Esp. Valuethinker.
garlandwhizzer
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Joined: Fri Aug 06, 2010 3:42 pm

Re: BRKB overlap with VTSAX overweight AAPL?

Post by garlandwhizzer »

Personally, I wouldn't worry much about modestly overweighting something that Warren Buffett finds to be an attractive investment. I view the addition of BRKB to TSM as a positive.

Garland Whizzer
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