Berkshire Built Apple Stake as Stock Slipped in Second Quarter

13F Filings Show Temasek, Berkshire Moves
  • Holding in iPhone maker valued at $1.46 billion as of June 30
  • Buffett’s company also trimmed Wal-Mart, Deere, Suncor stakes

Warren Buffett’s Berkshire Hathaway Inc. increased an investment in Apple Inc. during the second quarter, taking advantage of a dip in the iPhone maker’s stock to build the holding.

Berkshire boosted its stake in Apple by 55 percent to 15.2 million shares, according to a regulatory filing Monday from the billionaire’s Omaha, Nebraska-based firm. The investment was valued at $1.46 billion as of June 30.

“Apple’s stock came down substantially in the second quarter,” David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken students to meet Buffett, said in a phone interview. “Value investors always like the price to go down because it gives them an opportunity to buy more.”

QuickTake Apple

Apple shares fell shortly after Berkshire took its initial stake, sliding 12 percent in the second quarter. Sales of iPhones have fallen this year as customers upgrade their handsets at a slower pace. That, paired with mounting competition in China, means that the company’s revenue is expected to decline this fiscal year for the first time since 2001.

New IPhone

Yet with Apple gearing up to introduce a new iPhone this year, the trough of its product cycle may also have presented an opportunity for investors to boost their stakes. The share price averaged less than $100 during the quarter and has rallied 13 percent since July 26, when Chief Executive Officer Tim Cook forecast a sales decline for the fourth fiscal quarter that was less severe than many analysts had expected.

Berkshire’s bet stands in contrast to those of other prominent investors. In April, billionaire Carl Icahn said he exited a position in the company because of concern about its relationship with China. David Tepper’s Appaloosa Management disclosed in May that it sold its Apple stake in the first quarter.

Buffett has previously said that smaller investments, including the Apple stake, were initiated by his deputy money managers, Todd Combs or Ted Weschler. Even as Berkshire’s stock picks are closely watched by investors, they’ve become less important to its overall performance. During the past two decades, the billionaire has focused more on acquisitions than stocks to generate growth.

Wal-Mart Stores

Berkshire also trimmed a number of its holdings in the quarter. Its stake in Wal-Mart Stores Inc. -- one of Buffett’s picks -- fell to 40.2 million shares from 55.2 million. The retailer rallied 6.6 percent in the second quarter to $73.02 a share.

Buffett’s company also cut holdings of Deere & Co. and Suncor Energy Inc. in the three months ended June 30, according to Monday’s filing.

“It’s a little bit of fine tuning,” said University of Maryland’s Kass. Buffett and his deputies “do not make many changes to their portfolio.”

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