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Why Buffett Would Love to See Apple Fall Again


Mar. 7 2019, Published 11:22 a.m. ET


Apple (AAPL) is Berkshire Hathaway’s (BRK-B) biggest holding even though it sold some shares in the fourth quarter. Warren Buffett said that the shares were sold by a different investment manager. Ted Weschler and Todd Combs are two of the other investment managers at Berkshire Hathaway.

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Who sold Apple?

In an interview with CNBC, Buffett said that one of the two managers sold Apple shares, although he didn’t say which one. Buffett said the manager “works with a limited amount of money, $13 billion, roughly. So, if he wants to buy something, he needs to sell something.”

Buffett also said that Berkshire Hathaway’s average buying price for Apple “is about $141 or something like that.” In response to a question on whether he would buy Apple “at $160 or something,” Buffett replied in the negative. He said, “I’m always interested in lower levels in a number of stocks we own.” So, a fall in Apple stock would enable Berkshire Hathaway to buy more Apple shares at a lower price.

More buybacks

Buffett said that since Apple intends to be “cash neutral,” “They could do it either by acquisitions, or dividends, or repurchases. And my guess is it’ll be mostly repurchases.” Buffett said, “If the stock were at $200, it would buy 650 million shares. If it’s at, you know $150, you buy close to 900 million shares.” Berkshire Hathaway’s stake in Apple would likely rise with Apple’s buybacks unless it sells Apple shares.

However, Apple’s buyback activity was subdued in the quarter, which surprised many analysts given Apple’s price action and its massive cash pile.

Next, we’ll discuss Buffett’s views on Kraft Heinz (KHC).


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