Berkshire Hathaway's value is being driven by one of the "Four Giants," as stated in Warren Buffett's annual letter.

• Berkshire's cluster of insurers is the second-most important business, according to Warren Buffett, who also named Apple as such.
• The Oracle of Omaha expressed his support for CEO Tim Cook's stock repurchase strategy.
• Berkshire's equity portfolio is now dominated by its Apple stake, which is valued at over $160 billion and accounts for 40% of the portfolio.

Warren Buffett now views the tech giant as one of the four key components of his conglomerate, which consists mainly of businesses from the old economy, after five decades of assembly.

The 91-year-old investing legend named Apple as one of his "Four Giants" in his annual letter to shareholders, released on Saturday, and referred to the company as the second-most important after Berkshire's group of insurers, due to its CEO's leadership.

The letter stated that Tim Cook, Apple's CEO, considers users of Apple products as his top priority, but all other groups also benefit from his management skills.

The Oracle of Omaha expressed his support for Cook's stock repurchase strategy, which increases the conglomerate's ownership of each dollar of the iPhone maker's earnings without requiring any effort from the investor.

Buffett stated in his letter that Apple, our second-largest holding by year-end market value, is a different type of investment. Although our ownership in Apple has increased from 5.39% to 5.55%, this may seem like a small increase. However, each 0.1% of Apple's 2021 earnings equaled $100 million. We did not use any Berkshire funds to acquire this increase. Instead, Apple's stock repurchases were responsible for our accretion.

Berkshire's investment in Apple began in 2016, under the direction of Buffett's deputies Todd Combs and Ted Weschler. By mid-2018, the conglomerate owned 5% of the iPhone maker, which cost $36 billion. Today, the Apple investment is worth more than $160 billion and accounts for 40% of Berkshire's equity portfolio.

Buffett stated that only dividends from Apple are included in the GAAP earnings that Berkshire reports, and last year, Apple paid us $785 million of those. Despite this, our 'share' of Apple's earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple shares, an act that we applaud.

Apple's largest shareholder, excluding index and exchange-traded fund providers, is Berkshire. Over the years, the conglomerate has received regular dividends from the tech giant, averaging approximately $775 million annually.

Railroad and energy

In addition to his Coca-Cola business, Buffett also attributed his railroad company BNSF and energy division BHE as two other significant contributors to his conglomerate's success, with both achieving record earnings in 2021.

BNSF, our third Giant, remains the top commercial artery in America, making it a vital asset for both the country and Berkshire. BHE has emerged as a dominant force in the utility sector, with a focus on renewable energy and transmission across the US.

In the fourth quarter, Berkshire's operating earnings increased by 45%, driven by the ongoing recovery of its railroad, utilities, and energy businesses, which were affected by the pandemic.

In 2021, Buffett bought back a record $27 billion of Berkshire shares, preferring internal opportunities in an increasingly expensive market. Berkshire's cash pile reached a near record $146.7 billion at the end of last year.