Buffett Buys More Apple, Says iPhone Is ‘Enormously Underpriced’
(Bloomberg) -- The Oracle of Omaha is adding to his already large stake in Apple Inc.
Warren Buffett, 88, likes the technology giant because of its devoted customers, and has built up his stake in the company by “just a little” since his last regulatory filing, he said Thursday in an interview with CNBC. The Berkshire Hathaway Inc. chairman and chief executive officer said his firm has also bought back some of its own stock recently.
“They’ve got to keep having the product that this huge clientele regards as indispensable,” Buffett said of Apple. For customers, “the iPhone is enormously underpriced” compared with the utility it offers, he said.
Berkshire has been piling more money into Apple, increasing that stake to 252 million shares as of June 30. The investment is worth more than $50 billion and makes Berkshire the third-biggest shareholder in Cupertino, California-based Apple, with a more-than 5 percent stake, according to data compiled by Bloomberg.
Buffett has expanded his company into a conglomerate with a $520 billion market cap and footholds in the railroad business, insurance industry and energy sector. With the help of deputies Todd Combs and Ted Weschler, the billionaire investor also oversees a $180 billion stock portfolio that includes stakes in Wells Fargo & Co.
Earlier this year, Buffett teamed up with JPMorgan Chase & Co.’s Jamie Dimon and Amazon.com Inc.’s Jeff Bezos to create a venture that’s aiming to change how health care is provided to the three companies’ employees. In June, the group named Atul Gawande to lead the initiative, which will be based in Boston. While exact details on the venture are scant, Buffett has previously said that the goal is to go beyond just squeezing middlemen and actually lower costs and deliver better care.
Gawande is in the process of adding staff now.
“He’s hiring people,” Buffett said in a subsequent interview with Bloomberg Television Thursday. “Not very many people, but he will be hiring people.”
The initiative won’t succeed if it’s just a cost-cutting measure, Buffett said. “We’d like to be in a hurry but we’re not going to try and do something faster than it can be done,” he said.
Buffett was in New York Thursday to dine with the winner of his annual lunch auction, which benefits San Francisco-based charity Glide. The winner paid $3.3 million for the opportunity to bring guests to eat with Buffett at Smith & Wollensky.
He also discussed a variety of other topics:
- In the CNBC interview, Buffett said of escalating tensions surrounding tariffs, “we are seeing some effects from that”
- “We’ve seen more in the way of cost increases in the last year if you go across all of our businesses, but particularly building materials”
- Stock markets continue to hit records, but Buffett said he prefers equities over fixed income and reiterated his long-term view
- “You can’t sit around and wait for it -- you’re never going to catch the bottom,” Buffett said in the Bloomberg interview. “We’ve been shoveling out money anyway”
- “I’m buying stocks but I’m not buying them because I think they’re going to go up next year”
- Berkshire Hathaway has repurchased “a little” of its stock in recent months, Buffett told CNBC
- Berkshire’s board opened up another pathway for capital deployment in July, when it gave Buffett and Vice Chairman Charles Munger more leeway to repurchase shares
- Berkshire has challenge of deploying a $111 billion cash pile that keeps growing
- Buffett said in the CNBC interview that he aims to keep Berkshire’s airline stakes below 10 percent of those companies’ outstanding shares. That means he might trim holdings at times to keep under that threshold as some companies repurchase shares, he said
- Analysts have speculated that Berkshire could potentially buy an airline
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