Buffett Reiterates Praise for IBM, AmEx Leaders Amid Share Slump

  • IBM, AmEx run by `talented' managers, Buffett says in letter
  • Shares of the companies slumped at least 14% last year

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., reiterated his support for International Business Machines Corp. and American Express Co., even as those companies’ shares slump.

IBM and AmEx, along with Wells Fargo & Co. and Coca-Cola Co., “possess excellent businesses and are run by managers who are both talented and shareholder-oriented,” Buffett said in his annual letter Saturday. That passage is identical to what he wrote a year earlier.

IBM fell 14 percent in 2015 and AmEx plunged 25 percent, with both extending their declines since Dec. 31. While Berkshire is still sitting on huge gains from the American Express stake, IBM trades for less than what Buffett paid in 2011.

The unrealized loss on IBM widened to $2.6 billion as of Dec. 31 from $2 billion at the end of the third quarter. “We currently do not intend to dispose our IBM common stock,” Berkshire said in its annual report Saturday, also echoing a prior filing. “We expect that the fair value of our investment in IBM common stock will recover and ultimately exceed our cost.”

Buffett is known for building large positions in his favorite companies and holding them for years or even decades. Berkshire’s stock portfolio was valued at more than $112 billion as of Dec. 31 and has grown with the recent addition of Phillips 66 shares. Wells Fargo has dropped about 12 percent over the last year and Coke is little changed in that period.

“We think American Express, IBM as well as the other major holdings like Coca-Cola and Wells Fargo, those will continue to be consistent long-term holdings of Berkshire,” Jay Gelb, an analyst at Barclays Plc, said Friday in an interview on Bloomberg Television. “Holdings like American Express have billions of dollars of embedded gains for Berkshire. My sense is that Warren Buffett still has a positive long-term outlook on the company.”

Before it's here, it's on the Bloomberg Terminal.