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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.
Well, that is why he is a billionaire and I am a code monkey.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
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.
How does this affect me? Why is this important to anyone except Warren Buffett? Slashdot users don't like answering important questions. But this needs to be asked....
It probably doesn't affect you. Why is that important? Sorry; I felt it needed to be asked.
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?
China is now bleeding apple dry for technology. They did the same with GM, GE, Westinghouse, etc.
I prefer the "u" in honour as it seems to be missing these days.
If the article & my calculations are right he just became less successful by about 186 million.
Yeah, they might bounce back...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
How does this affect me?
Maybe it doesn't. That doesn't mean it isn't interesting to many others here.
Why should I care that some guy who has hundreds of times more money than I ever will has bought a $1 billion stake in Apple? Why is this important to anyone except Warren Buffett?
I don't know if you should care, but I'll tell you why I care.
Warren Buffet has proven to be very good judge of companies' long-term prospects. No one seriously believes he's infallible, but his approach has been extremely successful. His vote of confidence in Apple's future is something I would consider very interesting at any time, but it's even more interesting right now because so many people are questioning Apple's future. Having lost Steve Jobs (who was an ass, but obviously did a great job of leading the company to success) and with the company's cash cow showing signs that it may begin to decline, it's not clear whether Apple will continue to be the technology leader[*] that it has been.
So, what this amounts to is very informed prognostication on the future of an important tech company. To me, that's news for nerds. For nearly anyone interested in technology or the economy, that's stuff that matters.
But this needs to be asked
I don't see why, actually.
and I challenge any of you to give me a real answer rather than insulting me. Unfortunately, I don't think anyone here is up to the challenge.
I don't much care about challenges, but I also don't make a habit of insulting people, and I don't think I have here.
[*] I know it's popular on slashdot to argue that Apple isn't a technology leader because their core strength isn't blue-sky innovation, but instead taking obviously-good and somewhat-proven ideas and executing them with great polish and skill. I think that view ignores a lot of real innovation that Apple does in the process of creating their premium products, and ignores the fact that Apple's successful products are often trend-setters, even though they often set the "trend" well after comparable competing products have been on the market for some time.
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.
Buffet doesn't make bets like that. His strategy is buy and hold. So ephemeral events don't matter to him, is trends. The real news here is buffet is buying into the tech sector at all. Apple has a P/E ratio below the s/p 500 average. That factors of four below your typical growth stock in the tech sector . Amazon and Facebook have p/e of 80 to 100 or more. Thus Apple is no longer a growth stick it is now a very stable value stock whose price reflects its actual earnings. Icahn's strategey is the opposite of buffet where he looks for the quick pop in price by leveraging a companies cash reserves or salable assets. Apple did do a stock buy back but not a wasteful one. Icahn was not happy .
Apples foray into buying expensive things like Didi or Beats shares is weird. It's the reverse play many growth companies do. A overvalued growth company will often buy a cheap value company outside its area of expertise to give it delve revenue and to take advantage of its anomalous p:E . Apple is buying risky companies using its enormous unspent revenue. The idea I think is to raise the p/e which would have made Icahn happy I guess. Too late.
Some drink at the fountain of knowledge. Others just gargle.
You call a company with decades of sustained Earnings growth a failure simply because it's rate of growth is slowing.
He didn't say it was a failure. He said its growth is slowing. If Apple has 0% growth, but profits don't actually decline, then at the current price Apple stock is a great investment. The market consensus is that Apple's profits will go down as their market share declines. If you think otherwise, buy their stock and get rich. If you want to get rich even faster, buy options. Good luck.
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.