Apple as a Value Play: Buffett’s Berkshire Approves

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. “It’s not a leap of faith”. Berkshire held $1.6 billion of AT&T; as of December 31 but listed no investment in the phone company as of March 31, according to the filing.

It might even be a value stock. Apple’s shares, which were down 15 percent over the past month, went up by 3 percent on the day Berkshire revealed its investment.

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

Kristin Huguet, a spokeswoman for Apple, was not immediately available to comment.

Buffett told the WSJ that Berkshire’s Apple investment was made by one of its two investment managers, Todd Combs and Ted Weschler.

They each invest about $9 billion and usually make smaller wagers, while Buffett makes Berkshire’s bigger investments. Mr. Combs previously invested in Intel Corp.

Sales in China dropped to $12.49 billion in the second quarter, down 26 percent year over year, raising concerns about Apple’s strategy in what was once the company’s fastest growing market.

Berkshire just plunked down on $1 billion on Apple, but its largest technology holding is still International Business Machines (IBM).

Berkshire Hathaway, owned by the “Oracle of Omaha” Warren Buffett, has financed takeovers of consumer foods companies Heinz and Kraft. He also stated that they remain focused on developing in-car experience through its CarPlay system. He has run Berkshire Hathaway for so many years, and had such success that when his company buys a stock the purchase is often regarded as a strong vote of confidence about that company’s future profits and growth.

“To Buffett, computers were just tunnels that enabled him to reach other people who could play bridge”, wrote author Alice Schroeder in “The Snowball“, her biography of the investor.

Buffett’s entry comes weeks after another billionaire, Carl Icahn, announced he had sold all his Apple holdings after an extended campaign to get the company to deliver more value to shareholders.

Yahoo has struggled in recent years against rivals such as Facebook and Google, and reported a loss of £3bn in its latest accounts. Yahoo is not the type of thing I’d ever be an equity partner in.

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway, is a latecomer to tech stocks like Apple.

In Monday’s filing, Berkshire also reported higher stakes in IBM, Bank of New York Mellon Corp, Deere & Co and Visa Inc, and lower stakes in MasterCard Inc and Wal-Mart Stores Inc.

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