Apple stock closes at record high after Warren Buffett raises stake

Anna Jefferson
May 6, 2018

Speaking of Berkshire's investment in China's automobile manufacturer BYD, Buffett said it "has been doing so well lately". But with the latest stake purchase, it has grown to a massive 240.3 million shares worth $42.5 billion.

Mr Buffett's company has been buying up shares in Apple since 2016.

For Warren Buffett, CEO of Berkshire Hathaway, which owns Geico, that prompts the question: what does this mean for auto insurance?

Billionaire Warren Buffett brings the "Woodstock of Capitalism" back to Omaha this weekend for the annual Berkshire Hathaway stockholders' meeting, which is known for its straight talk and party-like atmosphere.

"Wells Fargo is a company that proved the efficacy of incentives, and it's just that they just had the wrong incentives", said Buffett.

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"If you look at Apple, I think it earns nearly twice as much as the second-most profitable company in the United States", Buffett said.

Buffett's initial commitment to Apple surprised many given his usual aversion to companies in the technology sector, but the billionaire views Apple more as a consumer products company. What is more surprising to investors is the not the fact that Buffet has invested in 75 million more Apple shares but the fact that he is completely out of IBM.

The US and China have a lot of common interests, and despite the recent tensions (read trade war) between the two economic superpowers, both the countries have a lot to gain by working together at present.

Warren Buffett on Saturday said the health partnership formed by his Berkshire Hathaway, JPMorgan Chase & Co. and making progress and will likely have a chief executive in place in a "couple months".

"Apple has one of the world's greatest business franchises", said Thomas Russo, a money manager with Gardner, Russo & Gardener of Lancaster, Pennsylvania, which owns Berkshire shares among its $14 billion in assets, in an interview.

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There may also be another reason for the investment: Berkshire's cash pile of $116 billion.

"I love the idea of having our 5% or whatever it may be grow" to 7% or more "without us laying out a dime", Buffett said.

In addition to its huge stock holdings, Berkshire owns roughly five dozen businesses in industries ranging from railroads and retail to auto insurance and industrial manufacturers.

Buffett discussed first quarter earnings ahead of Saturday's Q&A, explaining the new accounting rule affecting Berkshire's equity holdings, which he said will produce wild swings in quarterly earnings.

Apple reported $61.1 billion in revenue for the March quarter, up from $52.9 billion past year, and promised $100 billion in additional stock buybacks. The shares closed up 3.9% at $183.83 on Friday.

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