Warren Buffett is facing continuing pressure over his company’s huge investment in struggling US banking giant, Wells Fargo. But Berkshire Hathaway’s stake in Apple is another story, currently in its strongest rally for more than two years.
Wells Fargo shares fell another 0.8% overnight Thursday, taking its loss since the customer account and credit card fraud scandal broke to 7.6%, or close to $US18 billion.
Berkshire and Buffett (who owns 2 million shares personally), have seen the combined value of the stake fall by more than $US1.7 billion, so the losses have been noticeable.
But almost without any fanfare, Apple shares, Berkshire’s most recent big plunge, have seen a surge this quarter that has taken all the big name investors off guard, but not Buffett.
Apple shares are up 20% this quarter and 10% in the past five days. The shares have jumped from around $US92 to $US115 overnight Thursday, when the shares jumped 3.4%.
Berkshire’s stake emerged in May and wasn’t built by Buffett by one of his two fund managing subordinates, Todd Combs and, Ted Weschler.
In the three months to June, Berkshire Hathaway boosted his stake in Apple to 15.23 million shares as of June 30 from 9.81 million shares on March 31.
Berkshire built its stake in a falling market as Apple’s stock tumbled 12% during the quarter. At March 31 the stake was worth $US1.075 billion. At June 30, the higher stake of 15.23 million shares was worth more than $US1.4 billion. At Thursday’s close, the June 30 stake was worth $US1.725 billion. Berkshire shares are down 1.6% in the past five days as investors react negatively to the Well Fargo scandal, but in the past three months, the shares are up 2.6%.
So it hasn’t made up for the losses on Well Fargo, but it is one in the eye for all those managers who bailed out of Apple thinking it had run its course as a growth stock.
Bloomberg pointed out this morning that while Apple shares have been rising, the number of its institutional owners has fallen 1.3% to 3847 since June as 295 firms sold out of their positions entirely, a 28% increase from three months ago, according to Bloomberg.
“Since the end of June, Apple buyers have fallen 4.6 per cent while sellers, including those who cut stakes or exited completely, increased 4.4%," Bloomberg reported.
"Growing pessimism turned out to be misplaced as the stock staged the biggest quarterly rally in two years. Even as the S&P 500 suffered its biggest retreat since the UK’s vote to exit the European Union over the past week, Apple shares stood as one of the biggest winners.
"The stock has advanced more than 2 per cent every day since last Friday. T-Mobile US and Sprint said they’d received almost four times as many orders for the iPhone 7 as previous models, fuelling speculation that the new product is off to a faster start than usual," according to Bloomberg.
