Warren Buffett said he would be happy if his conglomerate Berkshire Hathaway owned more than 5 percent of Apple’s stock, including if the iPhone maker bought back more of its shares.
Buffett made his assessment before countless amounts of Berkshire shareholders attending the conglomerate’s annual meeting on Saturday in Omaha, Nebraska.
It came two days after Buffett revealed having bought 75 million additional Apple shares, and four days after Apple said it may buy back $100 billion (roughly Rs. 6.7 lakh crores) of stock.
“I’m delighted to see them repurchasing shares,” Buffett told Berkshire shareholders at the conglomerate’s annual meeting.
“I enjoy the notion of having our 5 percent, or whatever it’s, maybe grow to 6 or 7 percent without our laying out a dime. But you’ve to possess a, very special product, which has an enormously widespread ecosystem, and the product is extremely sticky.”
Apple’s share price hit an archive high after Buffett revealed having boosted Berkshire’s already large stake in the Cupertino, California-based company to roughly 240 million shares, now worth some $44 billion (2.95 lakh crores).
While Buffett “quite definitely” approves of Apple repurchasing shares, he and Munger expressed scepticism that Apple may find meaningful acquisitions which to pay cash.
“The reason why companies are buying their stocks is that they are smart enough to understand it’s better for them than anything else,” Munger said. He explained he and Buffett do not approve of most repurchase strategies.
Buffett’s initial commitment to Apple surprised many given his usual aversion to companies in the technology sector, however the billionaire views Apple more as a client products company.
The investment also helps Buffett deploy Berkshire’s cash and equivalents while he looks for his first major acquisition since paying $32.1 billion (2.2 lakh crores) for aircraft parts maker Precision Castparts Corp in January 2016.
Even after the Apple investment, Berkshire’s holdings of cash and equivalents was $108.6 billion (roughly Rs. 7.25 lakh crores), the company has said. Buffett made his comments in a reaction to a shareholder question posted by CNBC journalist Andrew Ross Sorkin.
“$100 billion is just a lot of money,” the question concluded.
“I used to believe so,” Buffett joked, prompting laughter and applause.