Buffett’s firm buys more than 5% of IBM

Investor Warren Buffett says his company bought $10.7 billion of IBM stock this year, about a 5.6 per cent stake.

Mr. Buffett revealed the new investment during an interview on CNBC on Monday. Mr. Buffett’s company, Berkshire Hathaway, will file a full quarterly update on its U.S. stock portfolio on Monday afternoon.

Mr. Buffett has long refused to invest in high-tech companies because he has said it’s too difficult to predict which technology businesses will prosper in the long run.

But he said he recently changed his view of IBM based on what he read in the company’s annual reports. He said he should have realised years sooner that the heart of IBM’s business is providing service and equipment to information technology departments.

“There’s a fair amount of presumption in many places that if you’re with IBM, you stay with them,” Mr. Buffett said.

So Berkshire bought about 64 million shares since March, or about 5.6 per cent of IBM. Mr. Buffett says he believes IBM has a sound plan for the future.

IBM shares rose $1.39 to $188.77 in premarket trading after rising as high as $190.55 earlier.

Berkshire’s investments are closely watched in the market because of Mr. Buffett’s successful record. Mr. Buffett has said that Berkshire has been buying aggressively during the recent market turmoil.

Mr. Buffett said on Monday that Berkshire had been adding to its already sizable stake in Wells Fargo, but he didn’t say how many more shares had been bought recently. At the end of June, Berkshire held 352.3 million Wells Fargo shares. That was up from 342.6 million shares Berkshire held at the end of March.

Monday afternoon’s filing with the Securities and Exchange Commission may not reveal a full picture of Berkshire’s investments because regulators often allow the Omaha-based company to conceal new investments for a time while building a position.

Mr. Buffett said that the third-quarter report that will be filed on Monday won’t show all of Berkshire’s new IBM stake because some of the shares were bought in the fourth quarter.

Besides investments, Berkshire owns roughly 80 subsidiaries including insurance, railroad and utility firms.

Courtesy The Hindu