Buffett's Berkshire Takes $1 Billion Position in Apple -- 3rd Update
May 16 2016 - 9:49AM
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 its competitive advantages. Mr.
Buffett's investment 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.
Berkshire is also said to be backing a consortium vying for
Yahoo Inc.'s Internet assets that includes Quicken Loans Inc.
founder Dan Gilbert, according to Reuters and other media outlets.
Such a move would mark another investment in an older tech
name.
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 Berkshire's 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 -- his only new position taken
in the quarter -- follows the exit of another well-known investor,
Carl Icahn, who said last month he had sold his big stake. 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.
But Berkshire sold off almost all of its $4.2 billion position
in Procter & Gamble Co., which has struggled for years to
accelerate its sales growth. Berkshire's remaining position in the
maker of Gillette razors and Pamper diapers was about $26 million
at March 31.
Berkshire, meanwhile, continued to bet on Phillips 66,
increasing the size of its investment by 23% to $6.5 billion. The
firm eliminated its position in AT&T Inc., which it 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 09:34 ET (13:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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