“Warren Buffett’s name makes regular appearances in the pages of Barron’s, but our weekly Tech Trader column tends to be a Buffett-free zone,” Alexander Eule writes for Barron’s. “That’s no disrespect to the Oracle of Omaha. Buffett, of course, has famously avoided technology during his long run of success, preferring businesses he can easily understand. The exception, a few years back, was an $11 billion bet on International Business Machines, which hasn’t exactly panned out.”
“Last week, Buffett’s Berkshire Hathaway made another exception, disclosing a $900 million position in Apple,” Eule writes. “Apple investors, looking for any glimmer of hope these days, bid the stock up 3.7% on the news. Apple finished the week up 5.2%, at $95.22, still 28% off its 2015 high.”
“For an investor seeking a simple business, Berkshire’s Apple buy comes at a curious time,” Eule writes. “Financially speaking, Apple faces an array of decisions, thanks to its swelling balance sheet. Dividend payments came to $11.6 billion last year on top of $36 billion for buybacks, swamping its record-high $8.1 billion spent on research and development. Tim Cook’s job is vastly more complicated than Steve Jobs’ ever was. Investors, in trying to evaluate the stock, face a similar dilemma.”
Read more in the full article here.
MacDailyNews Take:
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Warren Buffett’s Berkshire Hathaway takes new $1 billion stake in Apple – May 16, 2016
The stock is cheap. Plenty of large investors will be placing bets during this time. If it goes up to 110 then a 20% gain would have been made.
Exactly Apple is a great bargain these days and Buffet knows it. That’s what Buffet does.
The stock market is the only market where most people like to buy high and sell low. Buffet does it the other way around and gets it right. Buffet also buys stocks that are inherently good businesses and keeps them. He knows his stuff.
Over the long term Buffet has done brilliantly. Do not forget he has had his share of bombs. Not suggesting Apple will be one of them, just that your unadulterated statement if Buffett claim is a bit overdone.
Regarding: “Investors, in trying to evaluate the stock, face a similar dilemma.”
What is the dilemma?
Based on the current stock price Apple is paying a dividend yield of 2.39% regardless of what the stock price does later.
The dilemma investors face is Apple’s future growth prospects. Wall Street says Apple doesn’t have any growth left while Amazon, Facebook, Alphabet and Microsoft supposedly have unlimited growth prospects. All those companies stocks are up and only Apple’s is down. That’s all investors need to know. Tim Cook is the most disrespected CEO around and that’s definitely killing Apple shareholders. A tech company with a P/E of 10 is a slap in shareholders faces when many tech companies have a P/E 2X to 4X higher. Tim Cook is certainly sucking the value out of Apple.
In the short run the market moves on psychology; in the long run it moves on bottom line results. Apple under Tim Cook will do just fine.
It’s so absurd to think that Tim Cook is the cause of the problem; he is doing just great. And the critics make the fatal mistake of all critics: failing to consider what the alternatives are. No one should criticize Cook without naming who they think would be better. Then we can analyze the choice fairly.
At this point no one could do better than Cook. And it’s foolish to compare with Steve Jobs,because he was obviously a very special person and he ain’t comin’ back. It would be like comparing Bob Iger, the current CEO of Disney, with Walt Disney. People need to be more rational in their criticisms and comparison of realistic options.
Troll
They are not the only ones that need help.
Why should Apple’s small climb last? Berkshire had skin in the game some time ago and even at that time the stock price was falling. There’s nothing in Apple’s pipeline worth anything to raise Apple’s share price significantly. In another week, the share price will slip down towards $90 again which will be good for Apple buying back more stock. I think Apple shareholders should stop grasping for straws as long as Tim Cook is running the show. Wall Street in general thinks Apple is a piss-poor investment compared to most big tech companies and they’re probably right.
Tim Cook trying to sell more iPhones in a country where people can only afford cheap Android smartphones is a poor solution. Just as Alphabet is trying to destroy Apple with Android, Apple should be trying to destroy Alphabet with a search engine, ads and services. Tit for tat. Apple needs to sneak into Alphabet’s kitchen and steal their food.
If Apple and Alphabet/ Google prove anything, it’s that a company should stick to their core competencies. Steve Jobs always preached that. He believed in staying focused on only a few things, and making sure they made sense with your business.
Apple would be foolish to try to outdo Google on search and services; that’s not their forte. Just like Google is foolish to try to develop hardware and core OS.
Things work best when Apple does the hardware and OS, and Google comes out with some cool apps.
Apple will face major challenges as long as Tim Cook is CEO.
Apple will face major challenges no matter who is CEO; all companies face major challenges. It’s naive to think otherwise. The bigger the company, the bigger the challenges.
Do you really think a multi billion dollar company, the most valuable in the world, in one of the most competitive and ever changing industries, is somehow going to be able to coast and experience no difficulties? Talk about unrealistic expectations.
Apple faced major challenges under Steve Jobs. Who would you put in charge that would somehow magically keep Apple from facing “major challenges?” Until you cite a name, you have no credibility, because we cannot evaluate the alternative.
Ignorance and naivety are not virtues.
Thanks One Note Doofus Joe, as stupid a statement and agenda driven as ever.
“Tim Cook’s job is vastly more complicated than Steve Jobs’ ever was.”
Get that through that neanderthal thick skull of yours yet? Who says Steve Jobs would have an easier time of it than Tim Cook? There’s absolutely no guarantee of that and there isn’t another Steve Jobs waiting in the wings. It’s a different world in just a few years and a more fiercely competitive day.
Comparing Tim Cook with Obama is a compliment. Under Obama the stock market has doubled, unemployment been cut in half, the deficit is down, we’re out of Iraq, we’ve gotten bin Laden, gas prices are down, more people have healthcare than ever before, etc.
You can live in a reality free zone, but you will pay a price for it. That’s how you get Donald Trump running for the GOP.
You are a repulsive individual obsessed with your own homophobia and racial bigotry. I am sorry your mommy constantly left you in your excrement loaded diapers when you were little and that your local priest and your father and uncles molested you on a regular basis. You should channel your anger and hate in a more constructive way. Try our it into therapy so you can possibly lead a happier, more well adjusted life the incorporates mentally healthy relationships with other humans instead of the sheep you keep in your backyard.