Mon, May 07, 2018 page16

• Buffett craves more Apple shares, backs its buybacks

  ‘STICKY’ PRODUCTS: Apple’s third-largest shareholder, Warren Buffett said he is delighted that it is repurchasing shares, just two days after he bought 75 million more

  • Reuters, OMAHA, Nebraska
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  Billionaire Warren Buffett has been buying a boatload of Apple Inc shares and on Saturday last week suggested he would buy even more shares at the right price.

  At Berkshire Hathaway Inc’s annual shareholder meeting, Buffett credited Apple with developing “extremely sticky” products to which consumers become attached, and endorsed Apple’s decision to buy back its own stock, saying that it was the technology company’s most productive use of cash.

  “We would love to see Apple go down in price,” Buffett said.

  

  Berkshire Hathaway chairman and CEO Warren Buffett speaks to reporters at the CenturyLink Center in Omaha, Nebraska, on Saturday.

  Photo: AP

  Berkshire is now Apple’s third-largest shareholder, behind Vanguard Group and BlackRock Inc.

  “I’m delighted to see them repurchasing shares,” Buffett said, just two days after he revealed having bought 75 million additional Apple shares, and four days after Apple said it might repurchase US$100 billion of stock.

  At the end of last year, Berkshire had owned 165.3 million shares.

  Buffett described it as a mistake that he never thought Alphabet Inc’s Google and Amazon.com Inc made sense as investments for Berkshire.

  Buffett, 87, and his long-time partner and fellow billionaire Charlie Munger, 94, also took pointed questions on China, Wells Fargo & Co and their investment choices from shareholders, journalists and analysts at the more-than-six-hour meeting in Omaha, Nebraska.

  Buffett said it was unlikely that the US and China would come to loggerheads on trade and believed that the countries would avoid doing “something extremely foolish.”

  “The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time,” Buffett said, adding that any tensions should not jeopardize the win-win benefits from trade.

  He said US President Donald Trump should be an “educator-in-chief” on the invisible benefits of trade.

  The billionaire investor also predicted “bad endings” for cryptocurrencies, such as bitcoin, and said long-term US government bonds were a terrible investment because inflation would consume their returns.

  Buffett defended Wells Fargo and its chief executive, Tim Sloan, when asked when Berkshire would ditch the bank, one of its largest common stock holdings.

  Berkshire owned US$25.2 billion of Wells Fargo stock as of March 31, down 14 percent from year end as a series of scandals weighed on the bank’s reputation. US regulators imposed US$1 billion of fines last month over lending abuses.

  Buffett said the bank had committed the “cardinal sin” of incentivizing employees into “kind of crazy conduct.”

  However, he maintained that the bank was not “inferior,” as an investment or morally, to its main rivals.

  Shortly before the meeting, Berkshire ended its more than year-long stretch of falling operating profit, while a new accounting rule caused the conglomerate to suffer an overall net loss of US$1.14 billion, compared with profit of US$4.06 billion a year earlier.

  However, operating profit, which excludes investment and derivative gains and losses, rose 49 percent to a record US$5.29 billion, or about US$3,215 per Class A share, higher than the US$3,116 per share that analysts had expected, according to Thomson Reuters I/B/E/S.
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