Buffett taking bigger bite of Apple

Mr Warren Buffett (second from left) touring the shopping floor ahead of the Berkshire Hathaway annual meeting in Omaha on Saturday.
Mr Warren Buffett (second from left) touring the shopping floor ahead of the Berkshire Hathaway annual meeting in Omaha on Saturday.PHOTO: BLOOMBERG

OMAHA • Billionaire Warren Buffett has been buying a boatload of Apple shares and on Saturday suggested he would buy even more shares at the right price.

At Berkshire Hathaway's annual shareholder meeting, Mr Buffett credited Apple with developing "extremely sticky" products to which consumers become attached and endorsed Apple's decision to buy back its own stock, saying it was the technology company's most productive use of cash.

"We would love to see Apple go down in price," Mr Buffett said. Berkshire is now Apple's third largest shareholder, behind Vanguard Group and BlackRock.

And Mr Buffett described it as a mistake that he never thought Alphabet's Google and Amazon.com made sense as investments for Berkshire.

Mr Buffett, 87, and his longtime partner and fellow billionaire Charlie Munger, 94, also took pointed questions on China, Wells Fargo, guns, healthcare and their investment choices from shareholders, journalists and analysts at the meeting in Omaha, Nebraska, that lasted more than six hours.

The questions also elicited views on politics from the "Oracle of Omaha" and Mr Munger. Mr Buffett said it was unlikely that the United States and China would come to loggerheads on trade and believed the countries would avoid doing "something extremely foolish".

"The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time," Mr Buffett said, and that any tensions should not jeopardise the win-win benefits from trade.

"It is just too big and too obvious ... that the benefits are huge and the world is dependent on it in a major way for its progress, that two intelligent countries (would) do something extremely foolish," he said. "We both may do things that are mildly foolish from time to time."

The Trump administration has drawn a hard line in trade talks with Beijing, demanding a US$200 billion (S$266 billion) cut in the Chinese trade surplus with the US, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said on Friday.

Mr Buffett defended Wells Fargo and its chief executive Tim Sloan when asked when Berkshire would ditch the bank, one of its largest common stock holdings.

The bank had committed the "cardinal sin" of incentivising employees into a "kind of crazy conduct", Mr Buffett said. US regulators imposed US$1 billion of fines last month over lending abuses at the bank.

But he maintained that the bank was not "inferior", as an investment or morally, to its main rivals. Berkshire owned US$25.2 billion of Wells Fargo stock as of March 31, down 14 per cent from the year-end as a series of scandals weighed on the bank's reputation.

Wells Fargo investors gave strong backing to the bank's directors and executives on Tuesday, indicating confidence in its overhauled leadership to rebound.

Mr Buffett addressed his alliance with JPMorgan Chase banker Jamie Dimon and Amazon founder Jeff Bezos to tackle healthcare. Mr Buffett said US healthcare costs are a tapeworm on the economy, adding that the venture partners expect to name a chief executive within a couple of months.

Shareholders have been enthusiastic about Berkshire, which sent out slightly more tickets to this year's extravaganza than in 2015, when an estimated 42,000 celebrated Mr Buffett's 50th year at the helm.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 07, 2018, with the headline 'Buffett taking bigger bite of Apple'. Print Edition | Subscribe