The week started with a bang, given the news that Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) had taken a 9.81-million-share position in Apple (AAPL) worth about $1.08 billion as of March 31. Of course, what we don’t know is whether the conglomerate is already looking at a loss on that investment. Apple shares traded between a low of $92.38 per share (January crash) and a high of $110.42 (March 30) in the March quarter and look to close the week around $95 per share. (Apple is part of TheStreet’s Action Alerts PLUS portfolio.)
However, as far as investors are concerned, that matters not a whit. Apple is up almost $5 per share since the Berkshire 13F was filed last weekend. Maybe that news has set the bottom for the shares. Add in Katy Hubert of Morgan Stanley, probably one of the staunchest supporters of Apple among the sell-siders, lowering her 2016 smartphone market growth estimates, and you might have just seen the bottom in the fruit. We shall see.
In addition, also early this week, it was confirmed that Buffett and Berkshire were also backing Dan Gilbert, founder of Quicken Loans, in his bid to go after Yahoo’s (YHOO) core assets. As all of you know, Yahoo is in the second round of the bidding process for the sale of core Yahoo, which includes properties like Yahoo mail, Yahoo Finance, etc.
Yahoo shares also popped off the news of Buffett’s involvement but are set to close the week pretty much unchanged. The Wall Street Journal put out an article that said Round 2 of the bidding process was not going well for the company and its shareholders and that bidders were looking at a price of $2 billion to $4 billion for core Yahoo compared to earlier talk of $4 billion to $8 billion.
Wednesday had the release of the Federal Open Market Committee (FOMC) minutes, which seemed to be a lot more bearish at first glance than what the market had been expecting, which led to a big whoosh down on Thursday. However, yesterday calmer minds seemed to prevail and the markets were able to close the week on a positive note. I had an article on the site on Thursday that basically stated the market was possibly overreacting, and maybe the intention of the FOMC was to get the market to factor in the possibility of more than one rate hike in 2016, if economic conditions improved not just here at home but also overseas.
Let’s end this article where we started, with Buffett and his Apple buy. Funnily enough, not much attention has been given to the price paid by Berkshire. Buffett himself has admitted he is not tech-savvy, and would it not be ironic if the company’s average cost in Apple was at, let’s say, $105 per share, leaving the conglomerate with around $100 million in losses already?
As far as the other investors are concerned, they are just happy Apple seems to have the seal of approval from none other than the Oracle of Omaha.
Rest up this weekend because I have a feeling next week will be as volatile and tiring as this past one was.
With that, I wish each and every one of you a safe and joy-filled weekend with your loved ones.