Warren Buffett, who has long had an aversion to investing in tech companies, purchased 10 million shares of Apple earlier this year. The surprise investment comes five years after Buffett invested billions in IBM, his initial foray into that industry and departure from the type of companies Berkshire Hathaway has targeted for decades.
"I know about as much about semiconductors or integrated circuits as I do of the mating habits of the chrzaszcz," Buffett once wrote (chrzaszcz is a Polish word for beetle). "We will not go into businesses where technology which is way over my head is crucial to the investment decision."
Buffett has almost always stuck with what he knows -- investing in everything from soda to carpets, furniture and razors. The approach has helped make him America's most famous investor.
"To Buffett, computers were just tunnels that enabled him to reach other people who could play bridge," wrote author Alice Schroeder in Snowball, her biography of the investor."Buffett had a long-standing bias against technology investments, which he felt had no margin of safety."
The Apple investment appears especially curious given that Buffett's only prior tech investment -- IBM -- hasn't fared well so far. The stock's performance has trailed U.S. markets the past five years.
But much has changed since Buffett first invested in household names such as Coca-Cola and Geico. Now Buffett is 85 and his apparent successors at Berkshire Hathaway wait in the wings, Todd Combs and Ted Weschler. The duo invest independently, so a tech company that makes semiconductors - such as Apple - is fair game.
After the news broke of the investment, Buffett told the Wall Street Journal that either Combs or Weschler made the investment.
For David Kass, a University of Maryland Business School professor who writes frequently on Buffett, that makes sense given that the size of the deal -- roughly $1 billion -- is the amount that Combs and Weschler typically invest. Buffett himself generally invests in the $10 billion range.
Apple stock has also plummeted recently, making it a possible target for investors hunting for discounted stocks.
"I certainly did not expect this investment," Kass said. "But from a value investor point of view it makes some sense."
Apple also is a fit for Berkshire Hathaway given the company's sheer size. With more than $100 billion in assets, it doesn't make sense for Berkshire Hathaway to invest in small companies.
"He has the burden of cash coming in all the time," said Roger Lowenstein, author of Buffett: The Making of an American Capitalist. "There's a relatively small pond of companies that are big enough for Berkshire to make a difference in."
The Washington Post
Tue May 17 2016
his file photo taken on June 05, 2012 shows billionaire Warren Buffett, CEO and chairman of investment company Berkshire Hathaway, speaking at the Economic Club of Washington, during the club's 25th anniversary. - AFP Photo/Nicholas Kamm
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.