Updated May 16, 2016 11:34 a.m. ET
Warren Buffett’s Berkshire Hathaway Inc.
took a new $1 billion position in Apple Inc.
in the first quarter, a move that comes as the technology giant’s shares have been battered amid a slowdown in iPhone sales.
The legendary investor’s firm reported owning 9.81 million shares of Apple as of March 31, valued at roughly $1.07 billion. But the value of that investment dropped significantly after Apple reported its first quarterly revenue decline since 2003 last month.
Mr. Buffett, who for years avoided technology stocks, previously professed to not understand the sector and had argued that it is difficult to defend its competitive advantages. Mr. Buffett’s record has been built on investments in insurers, financial companies and industrial businesses, including household names like Coca-Cola Co. and American Express Co.
Mr. Buffett said in an email that the Apple investment was made by one of Berkshire’s two investment managers, Todd Combs and Ted Weschler.
The two former hedge-fund managers were hired in 2011 and 2012 to help manage Berkshire’s massive stock portfolio, with each managing about $9 billion. Mr. Buffett has said that large stock picks of above $1 billion are usually made by him, while smaller purchases are made by one of the two managers. They don’t consult with him before making their investing decisions, Mr. Buffett added Monday.
He didn’t say which manager picked Apple.
Berkshire’s first big jump into the tech space came in 2011 when the firm reported a position valued at more than $10 billion in International Business Machines Corp.
Berkshire increased that stake slightly in the first quarter.
The firm is also said to be backing a consortium that includes Quicken Loans Inc. founder Dan Gilbert that is vying for Yahoo Inc.
’s Internet assets, according to Reuters and other media outlets. Such a move would mark another investment in an older tech name.
In Apple, Berkshire likely saw a buying opportunity, as the shares are off sharply from last summer’s highs as the company struggles to maintain the sales surge that followed the introduction of its larger-screen smartphones in late 2014. The 2015 successors to those initial big-display models haven’t garnered as much enthusiasm from consumers.
Apple traded above $130 a share last July and ended the first quarter at $108.99 before continuing to fall. The stock got a bounce in morning trading on Berkshire’s investment, rising 1.8% to $92.10. The company’s market value is about $510 billion, according to FactSet.
Berkshire’s positions were disclosed in a 13F filing with the Securities and Exchange Commission, a quarterly requirement for investors managing more than $100 million. The report indicates the number of shares held and the value of each stake at the end of the quarter, so it isn’t clear if Mr. Buffett’s firm has continued buying the stock since the quarter ended.
Leon Cooperman’s Omega Advisors Inc. also got back into Apple during the quarter, according to a filing, taking a small $25 million position more than a year after selling a bigger stake.
Berkshire’s investment in Apple—the firm’s only new position taken in the quarter—follows the exits of other well-known investors, Carl Icahn and David Tepper. Mr. Icahn said last month that he had sold his big stake, telling CNBC at the time that Apple is a great company but no longer a “no-brainer” as an investment choice. Mr. Icahn made his initial investment, reported to be worth about $1.5 billion, in 2013. He subsequently bought more shares and called for the company to boost its stock buybacks. Mr. Tepper’s Appaloosa Management LP disclosed his sale in a 13F filing on Friday.
As for IBM, Berkshire bought 198,853 shares in the first quarter, bringing the total value of its position to $12.3 billion. IBM is one of Berkshire’s biggest four investments, along with Kraft Heinz Co.
, Wells Fargo
& Co. and Coca-Cola Co.
Those three positions were unchanged in the first quarter.
Berkshire, meanwhile, continued to bet on Phillips 66, increasing the size of its investment by 23% to $6.5 billion. The firm eliminated its position in AT&T Inc.,
which it had pared in the previous quarter as well. Mr. Buffett had been a large investor in DirecTV, which AT&T bought last July.
The firm also exchanged most of its $4.2 billion position in Procter & Gamble Co. in the quarter to buy battery maker Duracell. That deal, which was originally unveiled in late 2014, involved swapping stockholdings for a business that can generate cash and expand Berkshire’s earnings base without paying hefty taxes. The firm’s remaining position in the maker of Gillette razors and Pamper diapers was about $26 million at March 31.
Corrections & Amplifications:
Berkshire exchanged most of its position in Procter & Gamble in the quarter to buy Duracell. An earlier version of this article incorrectly stated the firm sold off the shares. (May 16)
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