23 January 2019
Warren Buffett has backed away further from IBM investment while loading up on Apple shares. Photo: Reuters
Warren Buffett has backed away further from IBM investment while loading up on Apple shares. Photo: Reuters

Buffett’s Berkshire cuts IBM stake, takes bigger bite of Apple

Warren Buffett’s Berkshire Hathaway has sold another large chunk of its stake in IBM Corp, while adding to its holdings in Apple, in a significant rejig of the company’s investment portfolio.

Berkshire cut its IBM stake 32 percent in the third quarter to about 37 million shares, Reuters reports, citing a US regulatory filing on Tuesday.

At current prices, the remaining shares are worth about US$5.37 billion. Prior to the third quarter, Berkshire held 54.1 million shares in IBM.

Berkshire’s IBM holding has fallen by 54 percent since the end of 2016, when it owned roughly 81 million shares for which it paid about US$13.8 billion.

Buffett, who is known for savvy investments, has admitted that the IBM bet was not one of his best.

During the third quarter, as Berkshire cuts its IBM stake further, it loaded up on Apple shares, boosting its holding in the iPhone maker by 3 percent to 134.1 million shares. 

Meanwhile, it also became Bank of America Corp’s largest shareholder by exercising warrants for 700 million shares.

In May, Buffett revealed he had begun selling IBM, telling CNBC he did not value Big Blue as highly as he did six years earlier when he started buying.

“IBM is a big strong company, but they’ve got big strong competitors, too,” he said.

The IBM investment had been viewed as a surprise, given the 87-year-old Buffett’s resistance to investing in technology companies and businesses he found harder to understand, Reuters noted.

Berkshire has said it paid an average of about US$170 per share for IBM. The shares closed at US$148.89 on Tuesday.

Berkshire’s Apple shares, meanwhile, are currently worth about US$20.7 billion.

The news of Buffett’s added stake in Apple came the same day as US authorities announced that they have launched a probe into allegations of patent infringement by Apple on various devices.

The US International Trade Commission said in a statement that the investigation was based on a complaint by Aqua Connect and Strategic Technology Partners of Orange, California.

The products at issue are certain Apple Mac computers, iPhones, iPads, iPods, and Apple TVs, it said.

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