Buffett has never been a huge fan of tech investments. In April, Apple said revenue for the quarter ended March 26 declined as an increasingly saturated smartphone market hurt iPhone sales, which fell for the first time.
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Filings with the Securities and Exchange Commission also reveal that Omega Advisors, headed up by Leon Cooperman, entered Apple again during the first quarter, snapping up a $25 million stake over a year after unloading a bigger position.
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. It marks Berkshire’s first investment in Apple.
Apple’s Mr Cook visited China on Monday, soon after Apple invested $US1 billion in ridesharing app Didi Chuxing, a competitor to Uber.
Other moves Berkshire made include selling 99% of its stake in Procter & Gamble Co.to just 315,400 shares, trimming its stake in Wal-Mart Stores Inc.by 1.7% to 55.2 million shares.
“Whenever you get a truly extraordinary business, they’re the hardest ones to value”, Buffett said a year ago on CNBC.
The big purchase and subsequent stock boost make Apple, at least temporarily, the most valuable company in the world, displacing Alphabet, which is the parent company of Google.
UBS analyst Steven Milunovich has a target price of $US115 on Apple’s stock and said in a client note last week that financial 2018 was likely to be a “breakout” growth year for the company. 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.
The Apple stake deepens Berkshire’s links to the tech sector, which Buffett has shunned, apart from a stake in International Business Machines Corp.
Apple CEO Tim Cook is now visiting China on a goodwill tour of sorts. Icahn, who has yet to file the 13F-HR disclosure of his holdings, owned $29.4 billion worth of common stock as of December 31.
He has also said that he does not know how to value tech stocks. Combs previously invested in Intel Corp.
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The investment comes following disclosure by another billionaire investor Carl Icahn, who sold his entire stake in Apple amidst its struggle in Chinese market. Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) has now officially taken a $1.1 billion position in the Mac maker, according to fresh SEC filings.
