In a rare move by the legendary investor into the technology sector, Warren Buffett’s investment arm Berkshire Hathaway Inc yesterday revealed that it holds a more than $1 billion stake in Apple Inc.
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The investment was made by one of Mr. Buffett’s deputies, Todd Combs or Ted Weschler, Mr. Buffett wrote in an e-mail to The Wall Street Journal. Berkshire Hathaway’s portfolio has been built with investments in financial companies, insurers, and industrial businesses like Phillips 66. Apple’s may be able to re-accelerate its sales momentum with the upcoming iPhone 7 through other product categories including autonomous driving or virtual reality hardware.
While he didn’t own any Apple shares at the time, Warren Buffett echoed Icahn’s sentiments in 2013 when he argued that the company was holding onto too much cash, though his suggested remedy was that the company buy back its own shares.
The average price paid was $109 a share.
Buffet’s firm hasn’t avoided technology completely, though.
For Buffett, the Apple investment takes him out of his comfort zone. The stock popped up more than 2% after news of Berkshire Hathaway’s billion dollar purchase hit the media. Berkshire Hathaway is now the biggest shareholder in IBM and recently increased its stake. And though Buffett, 85, has investments in IBM, he has largely shunned investments in tech companies until now, saying in 2012: ‘I just don’t know how to value them’.
Should You Invest in Apple Stock? After all, it was only three weeks ago that billionaire investor Carl Icahn, who had previously been very bullish on Apple, sold his entire stake in the business. He has always said he would not invest in companies he doesn’t understand. The firm cut its bet on JD.com, China’s second-biggest online retailer, by about a quarter to 44 million shares, and reduced its Apple holding by nearly half to 5.7 million shares, valued at $617 million.
Chief Executive Tim Cook is looking to develop other technologies for the Cupertino, California-based company, and last week unveiled a $1 billion investment in Chinese ride-hailing service Didi Chuxing.
The disclosure comes days after revelations that Mr Buffett is backing a bid for the core business of Yahoo, suggesting a new interest in internet companies.
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It’s not that Dan Gilbert and Warren Buffett are trying to buy Yahoo and both have equity together – it’s that Gilbert’s trying to buy Yahoo, with Buffett possibly financing the deal.
