Has Warren Buffett Become Apple’s (NASDAQ:AAPL) New Carl Icahn?

Yes we all were surprised when Warren Buffett despite his reservation against tech stocks invested in Apple (NASDAQ:AAPL) last year. We soon found out that it was one of Buffett’s lieutenants who made the call. But after that it seems the billionaire investment genius took matters into his own hands and invested huge sums of money into the most valuable company in the world.
Here is why Buffett may have become an Apple (NASDAQ:AAPL) believer;
Earlier this year in January Berkshire Hathaway (NYSE:BRK.A,BRK.B) more than doubled its stake in Apple (NASDAQ:AAPL). Buffett added about 72 million shares to his stake in one month alone. With 133 million shares the company is now among Buffett’s biggest holdings. His position in the company is worth over $17 billion.
Buffett’s latest January purchase was made right after Apple (NASDAQ:AAPL) reported its sales went up by 3% to $2.5 billion in 2016’s last quarter.
Many wondered why Buffett deviated from his non-tech stocks path to invest in Apple (NASDAQ:AAPL). To answer the question, the iPhone maker may be a tech stock but it matches Buffett’s investment model quite well.
First of all Apple is a huge brand by any standards, which makes it a reliable investment option. Moreover the iPhone maker’s valuation is relatively low, once again making it a value investment option. Another possible factor is its dividends and share buyback programs that over the years have been consistent. In the last quarter of last year, Apple spent about $10.9 billion in buying back its shares and since 2012 has been paying regular dividends to its shareholders.
This is exactly the kind of returns investors expect and demand from a reliable brand of Apple’s stature. The main appeal is the safety these stocks offer even during shaky economic conditions.
Buffett has always believed that any company that is managed well and has a loyal consumer base can help you think beyond your conventional investment mantra. Factors these companies have working in their favor are value and growth – two more boxes that Apple (NASDAQ:AAPL) checks for Buffett. According to Neuberger Berman’s analyst Daniel Fox Apple has so many factors that could attract a variety of investment styles.
According to Buffett he started seeing Apple’s real potential and impact on its consumers after talking to his grand children. The investment guru said that “the degree to which their lives centre around it (iPhone) is huge,” he told CNBC.
Moreover Apple (NASDAQ:AAPL) could just be the kind of stock Berkshire Hathaway needs right now. The firm’s last year’s net earnings were flat. The size of Buffett’s investment in Apple could give Berkshire’s returns the kind of push they need.
It seems Buffett is certainly with Apple (NASDAQ:AAPL) for the long haul. The investor made it clear that he certainly is not selling his position in the company yet.