It has emerged that Warren Buffett’s investment arm Berkshire Hathaway invested $1bn in Apple earlier this year, providing the tech giant with a welcome boost.
When Warren Buffett talks, investors listen. When he invests? They tend to follow suit. So, when news emerged of his investment in Apple, which only recently lost its crown as the world’s most valuable company to Alphabet, it had an economic effect.
Value is a concept. It can be extrapolated in many ways but, in the stock market, it’s predicated by share price.
The Wall Street Journal suggests it may not have been Buffett who made the decision to invest in Apple, given his long-held reluctance to back tech companies.
Rather Todd Combs and Ted Weschler, two investors Buffet has given increasing control to, are attributed with making the move.
The boost that this news gave the company – shares went up 3.7pc, adding $18bn in value – was welcome after a tough 2016 so far. In truth, even with this boost, shares are still down around 11pc since 1 January. Last week, Alphabet, for the second time this year, was valued at a higher figure than Apple.
$40bn of value was wiped off Apple shares overnight back in April when the company revealed the first-ever faltering iPhone sales figures. Revenues were still immense – $50.6bn was generated in Q2 – but falling $7bn below estimates is never good.
Alphabet, for its part, is hardly setting the business world alight as its valuation, although top, is faltering. In February, Alphabet overtook Apple for a few weeks before the latter regained its crown.
It will probably be a shorter-lived victory for Alphabet this time. Although the price Berkshire likely got its Apple shares at is far removed from what they’re worth now.
Warren Buffet image via Fortune Live Media/Flickr