Buffett Purchased Apple

One of the greatest investment news this week is the purchase of Apple stock by Berkshire Hathaway, the investment vehicle of Mr Warren Buffett who is known to dislike technology stock. His aversion of technology companies had led to his avoidance of the technology stock bubble and subsequent crashed in the late 1990s and early 2000s.

It is known that Mr Buffett prefers down to earth companies, such as newspaper, insurance and manufacturing entities that produced great profits with proven track record. It is also important to note that Mr Buffett would have high confidence over the management of the companies before his purchase. Hence, many observers were surprised that he had spent US$1 billion to purchase Apple.

I had my own share of mistakes made in purchasing technology stock, aka Creative Technology. Please see http://e21s.blogspot.sg/2015/11/creative-technology.html

If Mr Buffett had purchased Apple stock 5 years ago, I would probably have understood him. However, currently, I am puzzled why he feels that the stock is under priced when most of its products had already reached maturity, ie iPhone, iPad, MacBook etc. The only recent product is iWatch. How would this create the growth engine for Apple? Not forgetting, Apple had competitions from Windows, Google and Samsung. Perhaps Mr Buffett had found new ways to valuate technology companies. Perhaps it was a decision not made by Mr Buffett himself, but by his successors.

Apple is now (17 May 16) trading at about US$94 . At the time of purchase, which was a few months back, it could be purchased at more than US$100. Lets see its performance over time.