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Warren Buffett Buys $1 Billion Stake In Apple (cnn.com)
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.
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.
...because a successful businessman who have a proven track record of being able to predict future trends in business has made a $1bn bet that this particular tech company will keep growing? On a site about tech news?
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.
That is all.
His track record in tech is not so great. He bought and continues to buy huge chunks of IBM. He basically bought at IBM's peak and IBM's been in a steady decline since.
Apple is another company that seems likely to be at it's peak, or perhaps just past. However this doesn't make it a bad buy necessarily, nor does it mean he necessarily believes in growth. Apple has been paying a healthy dividend, which is the right thing to do for a company that doesn't really have good growth prospects (they are the biggest in the world already, and hard to imagine them finding a mechanism for growth). Not every investor is looking to buy in and then sell, focused on capital gains as a means to investment payoff.
XML is like violence. If it doesn't solve the problem, use more.
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 (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?
" $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)
“Common sense is not so common.” — Voltaire
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.