On Monday, following news of Buffett’s stake, Apple shares were up $2.94 USA, or more than three per cent, at $93.46 USA in morning trading on Nasdaq. Mr. Buffett’s record has been built on investments in insurers, financial companies and industrial businesses, including household names like Coca-Cola Co. and American Express Co.
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Berkshire Hathaway disclosed a holding of 9.81 million shares in the iPhone maker in a regulatory filing. And his poor-performing $10 billion investment in International Business Machines Corp.
Steve Wallman of Wallman Investment Counsel, said: “The stock is stunningly cheap, and it has a massive pile of cash”.
“Apple is not getting credit for research and development it is doing behind the scenes, which will eventually show up in new products”.
Kristin Huguet, a spokeswoman for Apple, was not immediately available to comment.
Buffett told the WSJ that Berkshire’s Apple investment was made by one of its two investment managers, Todd Combs and Ted Weschler. At the time, he compared buying back shares of Apple to purchasing a dollar valued at 80 cents. He invested in chipmaker Intel Corp for Berkshire in 2011.
Apple’s shares, which have lost nearly a third of their value since mid-April when the firm announced its first quarterly drop in sales in 13 years, rose 3.4% to $93.50 dollars by 11am on Monday following the news.
Apple’s market value last week dipped below that of Google parent Alphabet, even though Apple generates roughly triple the revenue and profit.
In late April, Apple reported its first decline in quarterly earnings since 2003, thanks to slowing iPhone sales. The company’s almost 30-per-cent share slide since the middle of a year ago may have created an opportunity for Berkshire, even though Mr. Buffett typically avoids technology investments.
The news comes after billionaire investor, Carl Icahn, recently disclosed that his investment firm has sold its entire stake below 3 per cent in Apple due to concerns about competition in China. And Greenlight Capital’s David Einhorn also has been decreasing his stake in Apple.
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.
Buffett, who is the world’s third richest person with a $66.5bn fortune according to Forbes magazine, has previously only invested in one tech company: IBM.
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Still, shares of Apple, which hit a new 52-week low on Thursday, rose 2% in early trading Monday on the news of Berkshire’s stake.
