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Warren Buffett Buys $1 Billion Stake In Apple (cnn.com) 120

Posted by BeauHD from the lump-sum dept.
An anonymous reader quotes a report from CNN: Berkshire Hathaway, the conglomerate run by Buffett, disclosed in a regulatory filing Monday that it purchased more than 9.8 million shares in Apple during the first quarter. It marks Berkshire's first investment in Apple. Berkshire acquired its position at an average price of about $109 a share. Apple's stock price has since fallen to just above $90, meaning that Berkshire's stake in Apple is now worth about $888 million. The Apple purchase is the second big tech investment by Berkshire, which has been steadily adding to its stake in IBM during the past few years. Until recently, Buffett had been famous for his lack of investments in the tech sector. But Apple fits perfectly in Buffett's wheelhouse. The company is a leader in its market and the stock is extremely cheap, trading for just 11 times this year's earnings estimates. Apple also has a pristine balance sheet, with $232.9 billion in cash. At the end of April, billionaire investor Carl Icahn sold his entire stake in Apple, citing the risk of China's influence on the stock. Last week, Didi, China's ride-sharing service and rival to Uber, announced Apple invested $1 billion in the company. There's been a lot of money shuffling taking place as of late as Apple tries to reinvigorate the market after it had its first earnings decline in more than a decade.
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Warren Buffett Buys $1 Billion Stake In Apple More

Warren Buffett Buys $1 Billion Stake In Apple

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  • It was one of his fund managers. They have complete autonomy when buying and selling stocks. I guess with a transaction this large, it's likely that Buffett was made aware of it but he's not the guy that pulled the trigger.

  • Very surprised (Score:4, Funny)

    by 140Mandak262Jamuna ( 970587 ) on Tuesday May 17, 2016 @08:12AM (#52126977) Journal
    I have resisted buying Apple stock from day 1. I saw the original iPad with 20GB or 40GB hard disk and a wheel and four buttons, I knew it was a hit. Still stuck to my "never an individual stock. Always funds. Always index funds". Finally I see decline in AAPL, and finally coming around to feeling smug, "ha! I knew I was right not to buy the stock". While my bandwagon friends are laughing at me, they can unload it after it loses another 20% and still will beat my great index fund strategy. Now, Apostle of Value, the one who never buffeted by winds of change, the guru from AUMaha, is jumping in?

    Well, that is why he is a billionaire and I am a code monkey.

    • now that apple is like coca cola he will milk it for the dividends

    • There are probably more reasons why he's investing in it. He's worth $66 billion and a $1 billion dollar investment would hide any deficiencies if a big fish decides to cash out. I get the impression someone called in a favor to him to keep the stock from dipping.

      I look forward to the shorting opportunities.

      • Re: (Score:2)

        by cdrudge ( 68377 )

        He may be worth the $66B, but he didn't personally invest in Apple. Berkshire Hathaway did, of which Buffett is the CEO. It turns out that one of his two lieutenants was the one that made the investment. I have a feeling that nothing BH does at that scale is ever "a favor".

      • Buffett is well-known to be pretty buddy-buddy with Microsoft, and specifically has pledged quite a lot of money to Bill Gates' "foundation". So it's fairly unlikely that anyone from Apple could count on him for any kind of favor. More likely, he simply sees Apple as a good investment.

    • Investing in AAPL (Score:2, Offtopic)

      by sjbe ( 173966 )

      Still stuck to my "never an individual stock. Always funds. Always index funds".

      Nothing wrong with that. You might leave some money on the table (or not) but you should stick with an investment strategy that fits your appetite for risk. Index funds are fine investment vehicle. Don't apologize for using them.

      Personally I haven't purchased AAPL for a different reason. Three reasons actually. First the stock is already quite valuable so the chance for it to double is not as high as with some other companies. Yes the PE is still reasonable but that is predicated on profits remaining

      • Apple's product strategy is kind of a high wire act. All it would take for the stock price to crater would be a single bad iPhone.

        I don't agree. They've had bad iPhones. They've bent over users with updates. It will take a lot more than that to get the iFanboys to switch.

        For a tech stock I think AAPL isn't a terrible investment but I think AMZN has more upside potential as a stock if you want to play in that sector and are thinking a few years down the road.

        You think they'll finally be profitable in only a few years?

        • don't agree. They've had bad iPhones. They've bent over users with updates. It will take a lot more than that to get the iFanboys to switch.

          They've had flawed iPhones but not a truly bad one. I'm talking one with flaws so bad it actually affects sales. I'm talking a seriously screwed up device. Something much worse than any problem we've seen so far. Geeks here on slashdot tend to overreact to what in reality are relatively minor missteps by Apple. Antenna-gate for example was a problem but since almost everyone puts their phones in cases anyway it didn't really matter much from a business perspective.

          Alternatively the other way Apple coul

          • Antenna-gate for example was a problem but since almost everyone puts their phones in cases anyway it didn't really matter much from a business perspective.

            Yes AntennaGate was such a problem they sold the same model - the GSM iPhone 4 - for four years without any modifications.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        Compare with companies like Royal Dutch Shell which pay 7-8% dividend yield and are less subject to consumer whims.

        Well, of course the oil industry pays well. Tobacco too - if you haven't invested in the tobacco industry, you're missing out on a lot of cash. (It's why they call those tobacco-less, oil-less and other such sin-free funds "ethical funds", which have a markedly lower rate of return.). And technology is the worst sector to invest in because the rate of return is very low - even Apple, considere

      • First the stock is already quite valuable so the chance for it to double is not as high as with some other companies.Yes the PE is still reasonable but that is predicated on profits remaining where they are which is to say VERY high.

        I think it's almost certain to double within ten years - simply based on iPhone replacement sales, and services revenue growth alone. The profits seem high, but there's also no reason to look ahead and see them going down much, and a LOT of reasons to think they will go up agai

        • I think it's almost certain to double within ten years - simply based on iPhone replacement sales, and services revenue growth alone.

          Possible but like I said I have my doubts. Apple is a good company and I think it's stock is fairly valued. I just have my doubts about their ability to continue to grow the company without a new hit product and without avoiding any missteps along the way. It think it's a good investment but I think there are better ones out there.

          Or, the fact that CurrentC just folded, leaving all sorts of high end stores (like Target) to start accepting ApplePay... Another factor is that Apple is continuously buying back its own shares.

          It's unclear how much impact ApplePay will have long term. I like the product but we just don't know yet. (BTW calling Target a "high end store" is pretty funny - I think you

          • Apple is a good company and I think it's stock is fairly valued.

            That's exactly my point, even if Apple is "fairly valued", it's only in terms about what people know about Apple today - it does not take into account the imminent growth on many fronts along with new products to launch in upcoming years.

            There's really no potential drop in Apple performance.

            BTW calling Target a "high end store" is pretty funny

            Not to most consumers. Target is one of the few physical retailers still doing very well.

            Reason being

            • Apple is "fairly valued", it's only in terms about what people know about Apple today - it does not take into account the imminent growth on many fronts along with new products to launch in upcoming years.

              ALL stock prices include expectations about future prospects of the company. It absolutely does take into account expectations regarding growth and new products. If you believe in some form of the efficient market hypothesis (and you should) then you would understand this.

              The stock price is much lower than it would be if people looked at the stock rationally.

              Because the market doesn't agree with your assessment it isn't rational? While it's conceivable you are right it's mighty presumptuous of you to presume that most other investors in Apple is being irrationally pessimistic. Markets are

      • Compare with companies like Royal Dutch Shell which pay 7-8% dividend yield and are less subject to consumer whims.

        Which Royal Dutch Shell are you talking about? I'm looking at quote.yahoo.com, RDS-B, and it says the yield is 3.76.

        Furthermore, the stock has gone between $36-$64 in 52 weeks (rounded), as opposed to Apple $90-$133.. So RDS had a much bigger percentage swing in a year..

        • Which Royal Dutch Shell are you talking about? I'm looking at quote.yahoo.com, RDS-B, and it says the yield is 3.76.

          RDS.A and RDS.B are the same company. The difference is one stock is denominated in Euros and the other in Pounds Sterling. Otherwise they are the same. Current dividend yield is close to identical for either. Currently hovering at around 7.4% [google.com] and has been bouncing between 7-8% for a while now.

          Furthermore, the stock has gone between $36-$64 in 52 weeks (rounded), as opposed to Apple $90-$133.. So RDS had a much bigger percentage swing in a year..

          That's a function of the swings in the price of oil recently. There currently is a surplus of oil on the market so unit price of oil is down and thus so are energy stocks. The price of oil will head back up even

    • I bought AAPL at about the iPod time. My costs are a split adjusted $6. Unfortunately, I only had $100 to invest in it.

    • Re: (Score:2)

      by afidel ( 530433 )

      I saw the original iPad with 20GB or 40GB hard disk and a wheel and four buttons

      It was the iPod and it had a 5GB HDD. I've still got one somewhere in a drawer at home.

    • Funds are okay but the fees really add up. I've had good success buying mosting stocks which are in successful funds, avoiding all their fees.

      • >> Always index funds

        > Funds are okay but the fees really add up. I've had good success buying mosting stocks which are in successful funds, avoiding all their fees.

        Are you thinking about managed funds, as opposed to the index funds he mentioned? My main index fund, IVE, has an expense ratio of 0.18%. $1.80 per $1,000. If you invest monthly,the mutual fund is probably cheaper on fees than buying individual stocks. Even you buy individual stocks less often (and miss out on growth), transaction

    • Still stuck to my "never an individual stock. Always funds. Always index funds". [snip]

      Well, that is why he is a billionaire and I am a code monkey.

      One is never going to become a billionaire by investing in index funds (unless one already has many, many millions to invest). The whole point of index funds is to distribute risk by going with the direction of the overall market. So, if things get better, your finances get better along with them. If the market tanks, you lose, but not more than other investors on average.

      Index funds are a way to "follow the herd," which is a relatively low-risk strategy for investments.

      People who get rich tend to ta

      • Well, I am not going into the stock market to make money. I am going there not to lose money (to inflation). Middle of the road, simple returns are enough for me. I am sticking to index fund, knowing very well this is not the fastest way to make a million bucks unless you start with 20 million bucks.
    • Hindsight is always 20/20. Don't beat yourself up.

  • I Scratch My Head. (Score:1)

    by Anonymous Coward

    Back in the day, Buffet would not buy companies he does not understand. In other words, he never bought 'tech' companies. Now just in the last few days we find out he owns a chunk of Apple and is in second round of bidding for Yahoo. With his advance age, this makes me think he is no longer controlling all major day to day investments at Berkshire Hathaway.

    http://www.businessinsider.com/why-buffett-doesnt-invest-in-technology-2014-3

  • Does this name remind anyone else of Darda cars? I'd take one of those as a taxi.

  • Need coffee... (Score:1)

    by Anonymous Coward

    Buffy buries stake in Apple.....

  • I'm thinking Buffett's getting a tad senile... (Score:3, Interesting)

    by frank_adrian314159 ( 469671 ) on Tuesday May 17, 2016 @08:21AM (#52127013) Homepage

    Apple is on its way down unless they can find some new product lines.I think this is going to be one of his (few) losers.

    My assumption is that Buffett thinks that technology is becoming commodity, Apple is a big brand consumer company, and that he understands consumer commodities. However, Apple still depends on its technology/manufacturing development to give it what little zing it has left and that this will come around and bite him in the ass. Wait for two or three new products to crash and burn in the market and/or manufacturing development. Apple's brand is getting a bit long in the tooth to be trendy anymore, as well.

    I think we'll be watching Warren riding this thing down.

    • Smarter people than us don't think that.

      http://www.asymco.com/2016/03/... [asymco.com]

    • No one saw Apple coming out with the iPhone. Granted it has been just steady improvement since then but that is how innovation is done.

      Personally I am waiting for every Mac to have a built in nfc reader and an OS api allowing purchases on websites, and app stores by swiping your phone over it. With tokenization it would safe and secure and push Apple Pay while being compatible with Google wallet 2.0. You could go further. Suddenly every Mac becomes a potential pos terminal.

    • Re: (Score:2)

      by sshir ( 623215 )
      Not Buffet, his lieutenants [wsj.com]. They're trying to prove themselves in a big way. We'll see...

    • Something you and others do not seem to understand is just how many ways Apple is growing.

      The primary way is still iPhones. Even though sales year over year are down, ever quarter still means an overall increase of tens of millions of people using new devices.

      So then on top of that you have services for all those devices, as Apple said over a billion now - and growing every quarter. That's a lot of app revenue, iCloud revenue, other related revenue increasing and increasing over time..

      And that's just the

      • Apple is in decline. They are too big to die. But also too big to become anything but another Ford or Sears Roebuck.

        It's a sad time to be an Apple Cultist. Even worse than that time when the first Apple Cultist opened their PowerBook and discovered a hard drive made by IBM.

        • If you think it's a sad time to be an "Apple Cultist", you should see how sad it is to be an "Apple Hater" who sees a brief pause in growth as fundamental decline!

          I mean, being that blind, what ELSE are you missing? Makes me shudder to think how purposefully uninformed you choose to be.

          i'm no "Apple Cultist", I'm a realist with apparently a far clearer view of both past and future than you will ever have.

          • Growth can never remain exponential or even linear without a market saturating.

            It's not hard at all to ignore Apple except to feel a little happier every time something bad happens to the company. Ignoring Apple doesn't equate to being ignorant about Apple.

            I own three SE/30s and an Apple ][. A pair of iMac G4's in fact. (It's a real hassle to get NetBSD to run on an SE/30, it makes running Linux on a modern PC with Microsoft's encrypted bootloader seem easy. Apple has always been the kind of fuckers tha

  • AAPL had been off-limits to him for a while (Score:5, Interesting)

    by Solandri ( 704621 ) on Tuesday May 17, 2016 @09:18AM (#52127305)
    Buffet doesn't play the stock lottery. That is, he doesn't try to make money off of the appreciation in stock price from when he buys it to when he sells it. He concentrates on acquiring stocks of companies which he feels are solid long-term investments, and will allow him to make money off the dividends they pay.

    Jobs hated paying dividends. Apple stopped paying them in 1995 to entice him to return to the helm, and didn't start paying them again until late-2012 after Jobs died. (For those who don't know, dividends are profits distributed to shareholders. Under Job's watch, Apple kept all its profits as retained earnings, making AAPL what's playfully called a baseball card stock. That is, a stock which doesn't pay dividends, so whose only value is being able to impress dinner guests by showing them that you own it, and how much you can get selling it to someone else. Google is still a baseball card stock - they don't pay dividends either.)

    The $232.9 billion Apple has in the bank almost exactly matches its net profit during the time it didn't pay dividends [statista.com] (2005-2015 adds up to $232.78 billion). In other words, rather than paying stockholders dividends or investing the money into R&D and expansion like you're supposed to with retained earnings, Apple has just been putting it into a bank account. Kinda makes me think that was a condition Apple's board put on Job's policy of not paying dividends. Maybe Buffet has a hunch about what they're going to do with the money?

    • Re: (Score:2, Informative)

      by sshir ( 623215 )
      Buffet has nothing to do with this position. Those are dealings of his lieutenants he's grooming for replacement.

  • Ichan has it right (Score:3)

    by WindBourne ( 631190 ) on Tuesday May 17, 2016 @09:20AM (#52127311) Journal
    China is now bleeding apple dry for technology. They did the same with GM, GE, Westinghouse, etc.

  • automobile industry (Score:3)

    by Britz ( 170620 ) on Tuesday May 17, 2016 @11:11AM (#52128027)

    Maybe Buffett thinks that there is lots of money to be made in the automobile industry. Maybe because of the number of orders Tesla received for their new model. One think Apple was able to deliver on was satisfying a huge demand for their product. Which isn't easy and which Tesla now has to prove they can do as well.

    • Maybe Buffett thinks that there is lots of money to be made in the automobile industry. Maybe because of the number of orders Tesla received for their new model. One thing Apple was able to deliver on was satisfying a huge demand for their product. Which isn't easy and which Tesla now has to prove they can do as well.

      Apple knows where the money is, they will introduce iCar with rounded corners and uglier than this. [wordpress.com]

  • I'd love to see Warren Buffet take a bath on tech stocks. Fake folksy guy.

    • Many mutual funds own Berkshire stock. So, if you have investments in mutual funds, you probably own Berkshire stock. Enjoy your bath!

      • Many mutual funds own Berkshire stock.

        Many have little to no brk exposure. Be in one of those. The glory days of brk are distant fading memory.

  • " $232.9 billion in cash."

    Apple, you've won the making money game. Give each of your 115,000 employee a million dollars. They can retire, go on a bender, whatever. The handful that stick around can keep making the products they enjoy making, perhaps spinning off their own start-ups that follow their unique passion.

    (I realize this is not how capitalism or businesses work, but the way they do work in the real world seems kind of strange to me)

  • Contrary to headline though accurately stated in summary, Buffett wasn't behind decision to buy Apple; it was others at Berkshire. [wsj.com]

  • Please fire tim cook (Score:2, Interesting)

    by Anonymous Coward

    He's done nothing.

    Apple morale is at an all time low, even lower than Gil Amelio.

    I go into the Apple store and wish there was something I should buy, but then I walk out, there's nothing.
    Judging from their earnings, I'm not alone.
     

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