Berkshire’s Billion-Dollar Bet On Apple

Warren Buffett's Berkshire Hathaway has officially taken a stake worth more than $1 billion in Apple as of March 31, according to a regulatory filing.

According to the filing, Berkshire owns 9.81 million in Apple Shares (worth $1.07 billion), which is noteworthy for a Buffett company since he has been outspoken against the tech sector in terms of investment strategies. Upon news of Berkshire's investment, Apple's stock got a much-needed boost of 3.7 percent. It's been struggling recently upon reports of its iPhone slowdown, and its recently quarterly revenue decline.

Up until now, the company's largest investment in the tech sector has been a $12 billion stake in IBM.

But with Apple's stock low, some analysts are claiming now is the time to buy.

According to what Steve Wallman, founder of Wallman Investment Counsel in Middleton, Wisconsin, who has owned shares in Berkshire since 1982 and Apple since 2003, told Reuters, Apple is " stunningly cheap, and it has a massive pile of cash."

"Apple is not getting credit for research and development it is doing behind the scenes," he was quoted as saying.

While some early reports on the day made it appear the investment in Apple was from Buffett himself, an assistant from the firm confirmed that the investment was made by the company. As this investment is considered to be a smaller one for the firm, those deals are typically made by his deputies, Todd Combs and Ted Weschler, Reuters reported.

An Apple spokeswoman did not immediately respond to requests for comment. In afternoon trading, Apple shares were up $3.20, or 3.5 percent, at $93.72.

Also in the news this morning about Buffett was about the long-speculated-upon sale of Yahoo that appears it could actually happen.

The reports at the moment are that Buffett and Quicken Loans Founder (and Cleveland Cavaliers owner) Dan Gilbert may be in the running to buy Yahoo. That consortium is one of a few suitors moving into a second round of bidding on Yahoo, reports indicated.

Reports remain a bit hazy at this point, but it appears that Gilbert is leading the bid effort, though there has been no public confirmation by a named source. Berkshire Hathaway seems to be backing the financing for this exercise in a move similar to its role in 3G Capital’s takeovers of H. J. Heinz and Kraft. It will not be negotiating the deal.

The Gilbert-Buffett bid is not the only one going into the second round. Verizon Communications, private equity firms, such as TPG Capital, and a group that comprises Bain Capital and Vista Equity Partners are also among those who will be at the party, according to unnamed sources reportedly briefed on the process.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

Click to comment