Buffett’s stake in Apple is noteworthy because Berkshire Hathaway has traditionally avoided technology stocks.
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A regulatory filing on Monday revealed that Berkshire owned 9.81 million Apple shares, a new position the investment conglomerate took during the March quarter.
Although Apple’s stock is trading cheaply, the company has a massive $233 billion in cash, which can be used to buy back stock and boost dividends, according to analysts. The duo invest independently, so a tech company that makes semiconductors – such as Apple – is fair game.
A $US1 billion bet by Warren Buffett’s Berkshire Hathaway on iPhone maker Apple signals the legendary investor is belatedly correcting his underexposure to technology companies.
He also has holdings of IBM, which he has been accumulating over the past several years, and he is reportedly backing a bid to buy Yahoo. 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. Tepper previously held 1.26 million shares, last valued around $133 million, media reports said. Between January 1 and March 31, inclusive, Berkshire sold all of its 46,577,138 shares of the company for an estimate of at least $1.56 billion. He has also said that he does not know how to value tech stocks.
Last month, billionaire Carl Icahn said he sold his Apple stake on concern about the company’s relationship with China.
Apple last month reported its first decline in revenue in 13 years, as growing competition hurt iPhone sales. Buffett tends to focus on slower-growth companies that he believes are undervalued by the market, and he has not been a big tech investor.
It is unclear whether the Apple investment was made by Buffett or by one of his portfolio managers, Todd Combs and Ted Weschler, who each invest about $9bn. He said that if the Chinese government wanted to, they could “come in and make it very hard for Apple to sell there. you can do pretty much what you want there”. Cyrus Mewawalla, managing director at London-based CM Research, said those initiatives are unlikely to pay off this year, but may reward more patient investors.
Buffett did not personally make the investment himself, the Wall Street Journal reported.
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Berkshire’s largest equity positions, in Kraft Heinz Co. and Wells Fargo & Co., are each worth more than $20-billion.
