Warren Buffett’s Berkshire Hathaway Inc increased its investment in Apple Inc in the second quarter, taking advantage of a dip in the iPhone maker’s stock to build the holding.
Berkshire boosted its stake in Apple by 55 percent to 15.2 million shares, according to a regulatory filing on Monday from the billionaire’s Omaha, Nebraska-based firm. The investment was valued at US$1.46 billion as of June 30.
“Apple’s stock came down substantially in the second quarter,” David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken students to meet Buffett, said in a telephone interview. “Value investors always like the price to go down, because it gives them an opportunity to buy more.”
Apple shares fell shortly after Berkshire took its initial stake, sliding 12 percent in the second quarter. Sales of iPhones have fallen this year as customers upgrade their handsets at a slower pace. That, paired with mounting competition in China, means that the company’s revenue is expected to decline this fiscal year for the first time since 2001.
Yet with Apple gearing up to introduce a new iPhone this year, the trough of its product cycle might also have presented an opportunity for investors to boost their stakes. The share price averaged less than US$100 during the quarter and has rallied 13 percent since July 26, when chief executive officer Tim Cook forecast a sales decline for the fiscal fourth quarter that was less severe than many analysts had expected.
Berkshire’s bet stands in contrast to those of other prominent investors.
In April, billionaire Carl Icahn said he exited a position in the company because of concern about its relationship with China.
David Tepper’s Appaloosa Management disclosed in May that it sold its Apple stake in the first quarter.
Buffett has previously said that smaller investments, including the Apple stake, were initiated by his deputy money managers, Todd Combs or Ted Weschler.
Even as Berkshire’s stock picks are closely watched by investors, they have become less important to its overall performance.
Over the past two decades, the billionaire has focused more on acquisitions than stocks to generate growth.
Berkshire also cut a number of its holdings in the quarter. Its stake in Wal-Mart Stores Inc — one of Buffett’s picks — fell from 55.2 million shares to 40.2 million. The retailer rallied 6.6 percent in the second quarter to US$73.02 per share.
Buffett’s company also cut holdings of Deere & Co and Suncor Energy Inc in the three months ended June 30, according to Monday’s filing.
“It’s a little bit of fine tuning,” Kass said.
Buffett and his deputies “do not make many changes to their portfolio,” Kass said.
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