The reason for the uptick?
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In a regulatory filing, Berkshire Hathaway (BRK.B – Analyst Report) disclosed that it had bought up 9.81 million shares of Apple Inc. The other is that Buffett has famously tended to shy away from technology companies, which he says are often hard to value.
“Apple at the current valuation makes a ton of sense; it’s a consumer-product company more than a tech company”, Jeff Matthews, who has written books on Berkshire, tells Bloomberg. The so-called Oracle of Omaha tends to avoid technology stocks, preferring to invest in companies where he understands their business and industry. Synovus Trust Company portfolio manager Daniel Morgan, noting that Buffett is known as a value buyer, said; “That kind of puts the icing on the cake that Apple now is probably considered more of a mature technology company, like we would think of Microsoft, Intel or Cisco”. Berkshire Hathaway is now the biggest shareholder in IBM and recently increased its stake.
Buffett and Berkshire did not immediate respond to a request for comment.
They each invest about US$9 billion and usually make smaller wagers, while Mr Buffett makes Berkshire’s bigger investments.
Last month, billionaire activist investor Carl Icahn revealed that he had sold his entire stake in Apple, citing the risk of China’s influence on the stock.
Yahoo has struggled in recent years against rivals such as Facebook and Google, and reported a loss of £3bn in its latest accounts.
The investment has dropped in value after Apple last month reported its first quarterly decline in revenue since 2003. Icahn said he still views Apple as a “great company”, but concerns over the Chinese economy and government led him to sell off his shares. Berkshire owns 81 million shares of IBM – or 8.4% of its shares outstanding – for a total investment of about $12 billion, says S&P Global Market Intelligence. Apple’s price, however, has since fallen further, to about $90 per share, though it quickly shot up to $93 following the news of the billion-dollar purchase. That’s really chump change to someone like Warren Buffett, so my guess is that he sees Apple has very undervalued and expects the stock to recover much of its real value at some point in the future.
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Earlier, Berkshire Hathaway provided finance to investment firm 3G Capital to take over Heinz and Kraft.
