Berkshire Hathaway bought 75m additional Apple shares in the first three months of the year, CEO Warren Buffett told CNBC, aggressively ramping up its bets on the iPhone maker.
Buffett’s Apple commitment over the past two years has surprised many, given his historical aversion to companies associated with the technology sector.
The news capped an astonishing week for Apple, which started out with huge fears over iPhone sales, but ended with the shares climbing 11% over five days, to value the Apple at $900.4bn (€751.4bn).
Berkshire’s initial investment in Apple was small, suggesting it was made by one of Buffett’s investment deputies, but with the latest stake purchase, it has grown to a solid 240.3 million shares worth $42.5bn.
“If you look at Apple, I think it earns almost twice as much as the second most profitable company in the United States,” CNBC quoted Buffett as saying.
The billionaire investor recently sold out of an unsuccessful investment in IBM, at the same time he was buying Apple. Berkshire said in February, Berkshire’s Apple stake rose by about 23% since the end of September to roughly 165.3 million shares.
Buffett has praised Apple chief executive Tim Cook and suggested he views Apple more as a consumer company, despite its Silicon Valley pedigree.
However, there may also be another reason for the investment: Berkshire’s cash position.
Berkshire has gone more than two years since a major acquisition, and Buffett said in his annual letter that he wants one or more huge non-insurance acquisitions to help him reduce Berkshire’s near €98bn in cash and equivalents.
Buying Apple accomplishes that, even though Buffett would rather buy whole companies than their stocks. Berkshire typically discloses its largest common stock holdings and percentage stakes in its quarterly and annual reports.
The report for the first quarter is scheduled for release this morning, just before Berkshire’s annual shareholder meeting in its Omaha, Nebraska hometown.
Apple reported $61.1bn in revenue for the March quarter, up from $52.9bn last year, and promised $100bn in additional stock buyback.
He said that Apple has “a wide, wide gap. I mean it’s an amazing business”.
Reuters and staff of Irish Examiner