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Did Buffett Miss the Bus on Apple?


Feb. 26 2019, Updated 11:15 a.m. ET


Berkshire Hathaway (BRK-B) is Apple’s second-largest shareholder. Despite Berkshire selling some Apple (AAPL) stock in the fourth quarter, it remains the company’s biggest holding. Buffett, whose experience with tech names like IBM (IBM) and Oracle (ORCL) hasn’t been pleasant, sees Apple as a consumer products company and not a tech company (QQQ) (AMZN).

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Buffett has been optimistic about Apple, and prior to the fourth quarter, Berkshire has gradually increased its stake in the company. Buffett has praised CEO Tim Cook and also supported Apple’s buyback program. As a general rule, Buffett prefers companies that invest cash in future growth. However, last year Berkshire relaxed its own buyback policy, and the company repurchased shares in the fourth quarter even as it received flak for not deploying Berkshire’s massive cash pile into other stocks.

Meanwhile, Buffett is still optimistic about Apple. Speaking with CNBC, Buffett said that if Apple “were cheaper, we’d be buying it. We aren’t buying it here.” He added, “I don’t see myself selling–the lower it goes, the better.”

Did Buffett miss the bus?

Having said that, Apple is 22.7% above its 52-week lows that it hit in the fourth quarter. With the United States and China moving forward on the trade deal and current buoyancy in markets, Buffett might have missed the bus in buying Apple.

In the fourth quarter, Berkshire added more shares of US Bancorp (USB), J.P. Morgan Chase (JPM), Bank of America (BAC), Bank of New York Mellon (BK), Travelers Company (TRV), and PNC Financial Company (PNC). However, it trimmed stakes in Wells Fargo (WFC), Southwest Airlines (LUV), United Continental (UAL), Phillips 66 (PSX), and Charter Communications (CHTR).

In the next article, we’ll see which companies could be on Buffett’s radar in 2019.


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