According to a regulatory filing Monday from Berkshire Hathaway (NYSE: BRKA), the conglomerate based in Omaha, Nebraska, ran by Warren Buffett, disclosed that it has more than 9.8 million Apple (NASDAQ: AAPL) stocks in first quarter. Apple rose 3.52% to $93.71 this afternoon EST.
Warren Buffett is well-known for his lack of investments in the technology sector. He has long avoided tech stocks, believing that they are lack of defensible competitive position; it’s hard to decide the winner and buy stocks at a cheap price. The purchase of Apple stocks is the second tech investments following IBM and the first investment in Apple.
Apple reported its first quarterly decrease in revenue in 13 years, and its shares had dropped around 15% this year through Friday, making it one of the worst stocks in Dow this year. However, this situation provided a chance for Berkshire Hathaway.
"Apple at the current valuation makes a ton of sense; it's a consumer-product company more than a tech company," investor Jeff Matthews, who has written books about Berkshire Hathaway, said. "The company has a great financial model, a great brand name and a cheap stock."
As a leader in its industry, the stock price is really cheap right now. Apple’s valuation is at the lowest point in recent years, which is attractive to Buffett, who made his fortune on value stocks. The P/E ratio of Apple reached about 10, far below that of S&P 500 of 24.
David Tepper’s Appaloosa Management announced on Friday that they have already sold all stakes in Apple in the first quarter due to the concern about its relationship with China.