Whatever Buffett wants, Buffett tends to get. And at the moment, he wants a tech company in Cupertino.
Warren Buffett's circle of competence just got a bit sweeter. On Monday, the billionaire's Berkshire Hathaway (BRK/A) firm submitted its quarterly 13-F filing to the SEC, and it revealed that Apple (AAPL) is now one of Buffett's holdings. At the end of the first quarter of 2016, Berkshire Hathaway had a $1 billion stake of 9.8 million shares in Apple, a notable development considering that Buffett tends to shy away from tech stocks—aside from his ongoing stake in IBM (IBM).
Back in November 1999, Buffett wrote a piece for Fortune where he explained why he didn't bother to invest in tech: essentially, it's difficult for companies to remain competitive for long periods of time, and it's hard to predict which companies will be successful far enough in advance to purchase them at a good price. As a value investor, buying stocks when they're trading lower than their fair value is an integral part of Buffett's investing philosophy.
Apple may not be the first name that comes to mind when thinking about undervalued stocks, but the tech company, which held the title most valuable company earlier this year, is down 10.81% for the year. After reaching a market cap of $534 billion in February, Apple is now worth $514 billion. Shares closed at $93.88 on Monday, a 29.4% decline from the 52-week high of $132.97. As a result, Apple's price/earnings growth ratio stands at 1.09 (typically, a PEG under 1 suggests that a stock is undervalued).
Buffett's investment in Apple comes on the heels of fellow billionaire Carl Icahn's April announcement that he no longer held a position in Apple. Icahn decided to ditch Apple due to concerns over the company's ability to thrive in China.
Berkshire Hathaway picked up shares in four other companies in addition to its Apple investment. Interestingly, all five companies experienced a net decrease in institutional ownership in the first three months of the year.
Click on the interactive chart to view data over time.
1. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, as well as sells software, services, peripherals, networking solutions, and third-party digital content and applications. Market cap at $514.22B, most recent closing price at $93.88.
Net institutional purchases at -35.4 million, resulting in a -1.09% change in ownership in the quarter ending 3/31/2016.
Berkshire Hathaway initiated a position with 9.8 million shares.
2. The Bank of New York Mellon Corporation (BK): Provides various financial products and services worldwide. Market cap at $42.80B, most recent closing price at $39.74.
Net institutional purchases at -7.7 million, resulting in a -0.86% change in ownership in the quarter ending 3/31/2016.
Berkshire Hathaway increased its stake by 3.6% to 20.8 million shares.
3. International Business Machines Corporation (IBM): Provides information technology (IT) products and services worldwide. Market cap at $143.48B, most recent closing price at $149.46.
Net institutional purchases at -10.7 million, resulting in a -1.88% change in ownership in the quarter ending 3/31/2016.
Berkshire Hathaway increased its stake by 0.25% to 81.2 million shares from the previous quarter.
4. Phillips 66 (PSX): Operates as an energy manufacturing and logistics company. Market cap at $41.35B, most recent closing price at $78.68.
Net institutional purchases at -14.3 million, resulting in a -3.73% change in ownership in the quarter ending 3/31/2016.
Berkshire Hathaway increased its stake by 22.9% to 75.6 million shares from the previous quarter.
5. Visa Inc. (V): Operates retail electronic payments network worldwide. Market cap at $185.55B, most recent closing price at $77.80.
Net institutional purchases at -14.2 million, resulting in a -0.79% change in ownership in the quarter ending 3/31/2016.
Berkshire Hathaway increased its stake by 3.6% to 10.2 million Class A shares from the previous quarter.
(Monthly return data sourced from MOD. Institutional data sourced from Fidelity. All other data sourced from FINVIZ.)
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