More: Buffett's Berkshire Takes $1 Billion Position in Apple -- 3rd Update
By Lauren Pollock - 9:19 am ET May 16, 2016 (Dow Jones)
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.
I can't get too excited over the Buffett purchase of 9.8M AAPL shares.
After all, Warren has said he had nothing to do with it and it came in a quarter where Carl Icahn
sold 53M shares. Wouldn't be surprised to learn Berkshire got those shares from Carl and they
are playing for a short/intermediate 10% bounce and they will then sell.
o~~~ O |
