Buffett's Berkshire Takes $1 Billion Position in Apple -- 2nd Update
May 16 2016 - 9:23AM
Dow Jones News
By Lauren Pollock
Warren Buffett's Berkshire Hathaway Inc. took a new $1 billion
position in Apple Inc. in the first quarter, a move that comes as
the technology giant's shares have been battered amid a slowdown in
iPhone sales.
The legendary investor's firm reported owning 9.81 million
shares of Apple as of March 31, worth about $1.07 billion. But the
value of that investment has already dropped significantly after
the company reported its first quarterly revenue decline since 2003
last month.
Mr. Buffett, who for years had avoided technology stocks,
previously professed to not understand the sector and has argued
that it is difficult to defend the competitive advantages of the
companies. Mr. Buffett's investment track record has been built on
investments in insurers, financial companies and industrial
businesses, including household names like Coca-Cola Co. and
American Express Co.
He hasn't avoided technology completely, however, taking a
position worth more than $10 billion in International Business
Machines Corp. in 2011. Berkshire slightly increased that stake
again in the first quarter.
In Apple, Mr. Buffett likely saw a buying opportunity as the
shares are off sharply from last summer's highs as the company
struggles to maintain the sales surge that followed the
introduction of its larger-screen smartphones in late 2014. The
2015 successors to those initial big-display models haven't
garnered as much enthusiasm from consumers.
Apple traded above $130 a share last July and ended the first
quarter at $108.99. The shares, meanwhile, got a bounce premarket
on the investment, rising 1.8% to $92.10.
Mr. Buffett's positions were disclosed in a 13F filing with the
Securities and Exchange Commission, a quarterly requirement for
investors managing more than $100 million. The report indicates the
number of shares held and the value of each stake at the end of the
quarter, so it isn't clear if Mr. Buffett has continued buying the
stock since the quarter ended.
Mr. Buffett's investment in Apple follows the exit of another
well-known investor, Carl Icahn, who said last month he had sold
his big position. He told CNBC at the time that Apple is a great
company but no longer a "no-brainer" as an investment choice. Mr.
Icahn made his initial investment, reported to be worth about $1.5
billion, in 2013. He subsequently bought more shares and called for
the company to boost its stock buybacks.
As for IBM, Berkshire bought 198,853 shares in the first
quarter, bringing the total value of its position to $12.3 billion.
IBM is one of Mr. Buffett's big four investments, along with Kraft
Heinz Co., Wells Fargo & Co. and Coca-Cola Co. Those three
positions were unchanged in the first quarter.
Berkshire, meanwhile, eliminated its position in AT&T Inc.,
which the firm had pared in the previous quarter as well. Mr.
Buffett had been a large investor in DirecTV, which AT&T bought
last July.
Write to Lauren Pollock at lauren.pollock@wsj.com
(END) Dow Jones Newswires
May 16, 2016 09:08 ET (13:08 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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