Warren Buffett's company reveals $1.46b stake in Apple

NEW YORK • Mr 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.

Berkshire held 9.81 million Apple shares as of March 31, according to a regulatory filing from the billionaire's company. The holding was valued at US$1.07 billion (S$1.46 billion) at the end of the first quarter.

Apple last month reported its first quarterly drop in revenue in 13 years, stoking concerns that the company's best days have passed.

The company's share slide since the middle of last year may have created an opportunity for Berkshire, even though Mr Buffett typically avoids investments in technology companies.

Apple chief executive Tim Cook is pivoting toward services and exploring new technologies, such as self-driving cars, to reduce reliance on the iPhone.

GREAT NAME, CHEAP STOCK

The company has a great financial model, a great brand name and a cheap stock.

MR JEFF MATTHEWS, author of Berkshire-related books, on Berkshire Hathaway buying Apple shares.

"Apple, at the current valuation, makes a ton of sense; it's a consumer-product company more than a tech company," Mr Jeff Matthews, author of Berkshire-related books, said about the new holding. "The company has a great financial model, a great brand name and a cheap stock."

Apple rose 2.4 per cent to US$92.71 at about 10am in New York. It had slumped 14 per cent this year through last Friday.

The Apple stake deepens Berkshire's commitment to the technology sector, apart from a big stake in International Business Machines. Mr Buffet has long said he does not understand the tech sector well enough.

The announcement comes as Mr David Tepper's Appaloosa Management disclosed last Friday that it sold out of its Apple stake in the first quarter. Billionaire Carl Icahn said last month that he exited a position in Apple because of concern about its relationship with China. Apple was not immediately available to comment.

Berkshire has waded more into technology investments in recent years. Mr Buffet's deputy Todd Combs previously invested in Intel and Mr Buffett is backing billionaire Dan Gilbert's bid for Yahoo's core assets.

The Berkshire chairman told CNBC that he could provide financing, if there were adequate protection, but does not have enough understanding of the Yahoo assets to take an equity stake. Berkshire also added to its holdings of Visa, Deere & Company and Bank of New York Mellon, according to yesterday's filing.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on May 17, 2016, with the headline 'Warren Buffett's company reveals $1.46b stake in Apple'. Print Edition | Subscribe