The reason for the uptick?
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Berkshire Hathaway, Buffet’s firm, picked up 9.8m shares in Apple, worth almost $1bn, during that three month period, an amount equivalent to 0.2% of the Cupertino, California-based outfit’s equity, the outfit’s latest 13-F filing with the US Securities and Exchange Commission revealed.
The revelation marks a fearless new world for Buffett, who has not traditionally invested in tech companies and has always vowed not to invest in companies he does not understand. “It makes sense because it’s a consumer company disguised as a technology company with a great business model, strong cash flow and a cheap valuation”, said Jeff Matthews, author of books about Buffett and a principal at the Ram Partners LP hedge fund. The other is that Buffett has famously tended to shy away from technology companies, which he says are often hard to value. He also increased his stake in IBM and is teaming with the founder of Quicken Loans, Dan Gilbert, in a bid to buy the online assets of Yahoo, reports Reuters. Tepper previously held 1.26 million shares, last valued around $133 million, media reports said. Both have been building their own portfolios in recent years and typically take stakes of $1 billion or less per company, while Buffett makes larger wagers.
Apple, the world’s biggest company by market capitalisation, has been under pressure as a result of slowing iPhone sales, threatening its chief revenue and profit source.
Buffet is famous for avoiding technology stocks because he does not invest in companies he does not understand. The investment was made one of Berkshire’s stock-picking lieutenants, CNBC and the Wall Street Journal quoted Buffett as saying via email.
Buffett’s interest “signals a change in the kind of company Apple is”, Gene Munster of Piper Jaffray, one of the most bullish analysts on Apple, told the Financial Times. Despite his belief in the strength of the technology company, infamous investor Carl Icahn sold his multibillion-dollar stock position in the previous quarter.
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Berkshire paid approximately $109 per share for its Apple stake, pegging the firm’s total investment at around $1.1 billion at the time it was made. San Francisco-based Visa climbed 0.7%, Deere rose 0.6% and BNY Mellon advanced 0.4%. It took a position worth more than billion in IBM in 2011.
