Buffett tells audience he is keen for bigger slice of Apple
OMAHA: Billionaire Warren Buffett has been buying a boatload of Apple Inc shares and at the weekend suggested he would buy even more shares at the right price.
At Berkshire Hathaway Inc’s annual shareholder meeting, Mr Buffett credited Apple with developing ‘‘extremely sticky’’ products to which consumers become attached.
He endorsed Apple’s decision to buy back its own stock, saying it was the technology company’s most productive use of cash.
‘‘We would love to see Apple go down in price,’’ Mr Buffett said. Berkshire is now Apple’s thirdlargest shareholder, behind Vanguard Group and BlackRock Inc.
‘‘I’m delighted to see them repurchasing shares,’’ Mr Buffett said, just two days after he revealed having bought 75 million additional Apple shares, and four days after Apple said it might repurchase $US100 billion ($NZ142 billion) of stock. At the end of 2017, Berkshire had owned 165.3 million shares.
‘‘I love the idea of having our 5%, or whatever it is, maybe grow to 6% or 7% without our laying out a dime.’’
And Mr Buffett described it as a mistake that he never thought Alphabet Inc’s Google and Amazon.com Inc made sense as investments for Berkshire.
Mr Buffett (87) and his longtime partner and fellow billionaire Charlie Munger (94) also took pointed questions on China, Wells Fargo & Co, guns, healthcare and their investment choices from shareholders, journalists and ana lysts at the meeting which lasted more than six hours, in Omaha, Nebraska.
The questions also elicited views on politics from the ‘‘Oracle of Omaha’’ and Mr Munger.
Mr Buffett said it was unlikely that the United States and China would come to loggerheads on trade and believed the countries would avoid doing ‘‘something extremely foolish’’.
‘‘The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time,’’ Mr Buffett said, and that any tensions should not jeopardise the winwin benefits from trade.
‘‘It is just too big and too obvious . . . that the benefits are huge and the world is dependent on it in a major way for its progress, that two intelligent countries [would] do something extremely foolish,’’ he said.
‘‘We both may do things that are mildly foolish from time to time.’’
The Trump Administration has drawn a hard line in trade talks with Beijing, demanding a $US200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said on Saturday.
Mr Buffett suggested US President Donald Trump should be an ‘‘educatorinchief’’ on the invisible benefits of trade.
Mr Munger, meanwhile, answered a question on steel tariffs imposed by the White House by acknowledging that US producers are hurting.
‘‘Even Donald Trump can be right on some of this stuff,’’ he said.
Asked why Mr Buffett was willing to do business with gun makers, he retorted, ‘‘I do not believe in imposing my political opinions on the activities of our businesses.’’
The billionaire investor said US corporate tax cuts were good for shareholders but cautioned that the longterm effects of economic choices could be hard to gauge.
And Mr Buffett predicted ‘‘bad endings’’ for cryptocurrencies, such as bitcoin, and said longterm US government bonds were a terrible investment because inflation would consume their returns.
Mr Buffett defended Wells Fargo and its chief executive, Tim Sloan, when asked when Berkshire would ditch the bank, one of its largest common stock holdings. Many shareholders applauded the question.
Mr Buffett said the bank had committed the ‘‘cardinal sin’’ of incentivising employees into ‘‘kind of crazy conduct’’. US regulators imposed $1 billion of fines last month over lending abuses.
But he maintained that the bank was not ‘‘inferior,’’ as an investment or morally, to its main rivals.
Berkshire owned $25.2 billion of Wells Fargo stock as of March 31, down 14% from year end, as a series of scandals weighed on the bank’s reputation.
Wells Fargo investors last week gave strong backing to the bank’s directors and executives, indicating confidence in its overhauled leadership to rebound.
Mr Buffett addressed his alliance with another banker, JPMorgan Chase & Co’s Jamie Dimon, and Amazon’s Jeff Bezos to tackle healthcare. Mr Buffett said US healthcare costs were a tapeworm on the economy, and he said the venture partners expect to name a chief executive within a couple of months.
Mr Buffett faces a challenge investing Berkshire’s more than $108 billion of cash and equivalents, including for acquisitions, saying his ‘‘phone is not ringing off the hook with good deals’’.
Shortly before the meeting, Berkshire ended its more than yearlong stretch of falling operating profit, while a new accounting rule caused the conglomerate chaired by Mr Buffett to suffer an overall net loss. He said the net results were not representative of the business.
The accounting change required Berkshire to report unrealised losses in its equity portfolio, which totalled $170.5 billion at year end, regardless of whether it planned to sell those stocks.
Berkshire’s net loss was $1.14 billion, compared with profit of $4.06 billion a year earlier.
But operating profit, which excludes investment and derivative gains and losses, rose 49% to a record $5.29 billion, or about $3215 per class A share, higher than the $3116 per share analysts had expected, according to Thomson Reuters I/B/E/S.
Shareholders have been enthusiastic about Berkshire, which sent out slightly more tickets to this year’s extravaganza than in 2015, when an estimated 42,000 celebrated Mr Buffett’s 50th year at the helm. It is thought the online audience, via Yahoo Finance, was even larger. — Reuters
❛ I love the idea of having our 5%, or whatever it is, maybe grow to 6% or 7% without our laying out a dime