Saturday 3 December 2016

Buffett stake confirmation puts floor under falling Apple

Jonathan Stempel

Published 17/05/2016 | 02:30

Billionaire Warren Buffett’s Berkshire Hathaway has boosted tech giant after its near-€1bn stake is revealed. Photo: Bloomberg
Billionaire Warren Buffett’s Berkshire Hathaway has boosted tech giant after its near-€1bn stake is revealed. Photo: Bloomberg

Warren Buffett's Berkshire Hathaway yesterday revealed a new stake in Apple, in a bet that the stock's price could rebound after iPhone sales fell for the first time.

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Berkshire held 9.81 million Apple shares worth $1.07bn (€944m) as of March 31, according to a regulatory filing detailing most stock holdings of Buffett's Omaha, Nebraska-based conglomerate.

News the stock is backed by Buffett's fund comes at a good time for Apple. Its shares have fallen by nearly one-third since April 2015.

After dropping to $90 a share on Friday they were up $2.13, or 2.4pc, at $92.65 in early trading, likely yesterday because of Berkshire's imprimatur.

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.

Buffett typically makes Berkshire's multibillion-dollar investments, while Combs and Weschler make smaller wagers.

The investment deepens Berkshire's commitment to the technology sector, which Buffett has largely shunned apart from a big stake in IBM, which grew slightly in the first quarter.

Apple last month reported its first quarterly decline in revenue in 13 years as an increasingly saturated market hurt iPhone sales.

Chief executive Tim Cook is looking to develop other technologies, and last week unveiled a $1bn investment in Chinese ride-hailing service Didi Chuxing.

"The stock is stunningly cheap, and it has a massive pile of cash," said Steve Wallman, founder of Wallman Investment Counsel in Middleton, Wisconsin, who has owned Berkshire since 1982 and Apple since 2003.

"Apple is not getting credit for research and development it is doing behind the scenes, which will eventually show up in new products."

An Apple spokeswoman did not immediately respond to requests for comment.

The Apple stake may have been bought with proceeds from the sale of AT&T stock by Berkshire this year. (Reuters)

Irish Independent

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