Apple last month reported its first decline in revenue in 13 years, as growing competition hurt iPhone sales.
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Warren Buffett has made it no secret that he did not understand the Technology sector and has argued against Tech stocks in the past, saying that it’s hard for companies to defend their competitive advantages, reports The Wall Street Journal. “The company has a great financial model, a great brand name and a cheap stock”.
Mr Buffett did not make the Apple investment himself, his assistant confirmed in an email to The Wall Street Journal, meaning that it was made by one of his stockpicking deputies, Todd Combs and Ted Weschler.
Speaking of Berkshire’s other portfolio managers, Cunningham said “my headline for this story isn’t so much that Warren is now warm and fuzzy on tech but that his brain-trust is much larger than it has ever been”. If Apple starts cutting the prices on its products, that would be a warning something is wrong, Doradla says. There have been mixed results in other tech stocks – but Buffett’s own selection in International Business Machines Corp. Berkshire increased that stake slightly in the first quarter.
Buffet, known as the “Oracle of Omaha”, said he would only act as a potential financing partner for Quicken Loans billionaire founder Dan Gilbert’s bid.
The divergence of the opinion on the stock, which has lost about a third of its value over the past year, highlights Apple’s transition from being a high-growth go-go stock to a more boring company in a slower-growth market – one exactly out of the playbook of Berkshire Hathaway. Apple was the only new position taken during the first quarter by Berkshire, according to the firm’s latest 13F filing. The stock got a bounce in morning trading on Berkshire’s investment, rising 1.8 percent to $92.10. The company’s adjusted profit is expected to drop almost 10% in the current fiscal year, says S&P Global Market Intelligence.
However, Berkshire did more than just buy into Apple in the first quarter. Tepper previously held 1.26 million shares, last valued around $133 million, media reports said.
The investment came despite the increasing view among investors that Apple may deserve a lower valuation because its heady growth days may be over, though Berkshire has long favored companies with strong balance sheets and management.
This article, Warren Buffett Invests .1 Billion in Apple Stock: Should You Invest Too?
Another prominent investor, Carl Icahn, announced earlier this month that he’d dumped all of his AAPL stock.
The stake comes with the company’s shares under considerable pressure.
Yahoo is valued at £27bn but its core business was put up for sale in February, after ditching plans to spin off its £21.7bn stake in ecommerce group Alibaba.
Berkshire’s major investments are in companies such as American Express Co., Coca-Cola Co. and Wells Fargo & Co.
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Berkshire, meanwhile, continued to bet on Phillips 66, increasing the size of its investment by 23 percent to $6.5 billion.
