Published: Sun, May 06, 2018
Money | By Ethel Goodwin

Apple hits record high after Berkshire increases stake

Apple hits record high after Berkshire increases stake

Apple is now Berkshire's No.1 stock holding, eclipsing long-time top holding Wells Fargo. The latest 75 million shares are further addition to its now existing stock.

Berkshire shareholders can celebrate the fact that most of the companies 90-odd businesses are performing well as the economy continues growing, but the conglomerate's future is always in the back of their minds because Buffett is 87. Apple is the exception to his rule, clearly he feels comfortable enough that he understands the company and its business to have made such a sizeable call on it given that its shares now represent nearly a quarter of Berkshire Hathaway's portfolio.

According to CNBC, Berkshire Hathaway will earn about $700 million annually in Apple dividends.

Amazon, the second-most valuable company in the world - which on April 30 had moved to within $79 billion of Apple's net worth - was a more distant No. 2 at Friday's close, just four trading days later, trailing the iPhone maker by $166 billion.

Apple (AAPL) could spend some money acquiring another company, but Buffett said it would be "extremely hard" to find suitable takeover target.

Buffett's Apple commitment over the past two years has surprised many, given his historical aversion to companies associated with the technology sector. 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.

"I think Apple was much more of a consumer products business", Mr. Buffett had said last May in a Berkshire Hathaway's annual shareholders meeting.

However, there may also be another reason for the investment: Berkshire's cash position. "I don't agree with that", said Catherine Keane, a 67-year-old shareholder attending her first annual meeting.

"The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time", Buffett said at Berkshire Hathaway Inc's annual shareholder meeting, and that any tensions should not jeopardize the win-win benefits from trade.

But Berkshire also ended a long stretch of disappointing operating performance, posting record operating profit as insurance rebounded from a hard quarter while economic growth bolstered results in railroad, industrial and consumer businesses.

Apple reported US$61.1b in revenue for the March quarter, up from US$52.9b a year ago, and promised US$100b in additional stock buyback. The shares closed up 3.9% at $183.83 on Friday.

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