Apple Inc. (NASDAQ:AAPL) is an amazing company and everybody, apart from Warren Buffett of course, that wasn’t exposed to its incredible growth in recent years, wishes they’d bought in. That doesn’t mean that every institution should joint the party however, and the Swiss woke up this week to find that their own central bank owns more than $1 billion in Apple stock.
Why would a central bank invest in Apple? The reasons aren’t quite as nefarious as you might think. The Swiss National Bank isn’t defrauding investors or manipulating the world’s stock market, it’s trying to make a profit, something the rest of the world’s central banks aren’t even capable of doing. Here’s a look at what makes the Swiss Central Bank so special.
SNB needs Apple
The Swiss National Bank, or SNB, is a private bank. Not in the sense that some suggest that the Federal Reserve is private, though. 55% of its shares are owned by the Swiss Cantons, the Swiss equivalent of states, and their banks. The remaining shares can be bought and sold by private investors.
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The Swiss National Bank must keep a profit in order to keep those shareholders happy, while it must maintain the monetary system under its charter with the cantons. That precarious position at the center of one of the world’s financial havens makes the SNB an international oddity.
The purpose of holding so much Apple stock may not be to increase profits, however. The SNB has huge much international currency holdings due to the country’s export-based economy. Most central banks invest that cash in ultra-safe government bonds, but the Swiss National Bank, which has dual headquarter in Zurich and Bern, is unique in diversifying its dollar holdings into stocks as well as bonds.
Swiss National Bank buys Apple Inc.
The Swiss National Bank owned 8.9 million shares in Apple at the end of the first quarter of 2015 according to a regulatory filing. The central bank purchased 5.6 million shares in the iPhone maker during the first quarter of the year. In reality the central bank owns so much Apple for the same reason that other institutions buy into the stock, it believes it’s a good bet for growth.
The SNB holds stock in more than 2,000 companies listed in the United States. The company’s stakes in US companies are worth $37.5 billion as a whole at the end of the year. 18% of the bank’s entire non-Swiss Franc investment portfolio is invested in equities around the world.
The stake in Apple Inc., assuming it hasn’t changed since the end of the first quarter, is worth $1.11 billion on Thursday’s closing price.