Warren Buffett acquires $1 billion stake in Apple, sends stock up 3.7%

Warren Buffett’s investment firm Berkshire Hathaway has acquired a $1 billion stake in the technology giant Apple.

In a recent regulatory filing the company disclosed that it now holds 9.81 million shares in Apple.

Warren Buffet pic
Warren Buffett himself is believed not to have played a direct role in the decision to invest some of Berkshire Hathaway’s cash in Apple, according to a WSJ report. 

Buffett’s investment arm does not usually opt for tech stocks, typically going for “value stocks”, so this latest purchase has come as a bit of a surprise.

Over the past year Apple’s value has dropped by almost 30%. It rose on Monday by 3.7%, closing at $93.88.

“The stock is stunningly cheap, and it has a massive pile of cash,” Steve Wallman, the founder of Wallman Investment Counsel who has owned Berkshire shares since 1982 and Apple shares since 2003, told Reuters.

“Apple is not getting credit for research and development it is doing behind the scenes, which will eventually show up in new products.”

Berkshire’s vote of confidence in Apple could help ease investor concerns about the tech giant’s less than stellar performance in the Chinese market.

“Warren Buffett kind of lays some of those anxieties a little bit to rest,” Gene Munster, managing director and senior research analyst at Piper Jaffray, told CNBC. “He believes it’s going to be around for a long time and going to be a worthwhile investment, I think that’s the real takeaway.”

Sales in China dropped to $12.49 billion in the second quarter, down 26 percent year over year, raising concerns about Apple’s strategy in what was once the company’s fastest growing market.

On Monday CEO Tim Cook met with Chinese officials, and last week he announced a $1 billion investment in ride-hailing company Didi Chuxing.

“What this does, is show that Tim Cook is on the offense in China,” Munster was quoted by CNBC as saying, adding that the investment in Didi Chuxing represents a shift from core hardware to services.