Nov 162011
 

Warren Buffett announced on Monday, November 14 that Berkshire Hathaway had invested $10.7 billion in the common stock of IBM.  This equals a 5.5% ownership stake in IBM.  Berkshire had been accumulating this position since March, 2011, and it represents the largest single investment it has made in its equity portfolio, which had a total value of  $59 billion on September 30.  (Previously,  Berkshire  had acquired 100% of the shares of Burlington Northern Sante Fe Railroad for $33 billion.)  Berkshire Hathaway paid an average price of $170 per share for its position.  IBM’s shares closed on November 16 at $186.62, which represents a 10% profit for Berkshire on these shares.  IBM currently ranks second in value ($12 billion) in Berkshire’s portfolio, behind only Coca-Cola ($13 billion).  Berkshire accumulated its Coca-Cola shares in 1988 at a cost of $1.3 billion.

I was quoted in a Bloomberg article on November 14 on this subject:

Buffett “had the funds and the opportunity to purchase shares at an attractive price,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He’s not going to panic when there are some temporary economic problems which could cause the stock markets to plunge for some period of time. He just sees that as a buying opportunity.”

The entire article is available at:

http://www.bloomberg.com/news/2011-11-14/berkshire-takes-10-7b-ibm-stake-buffett-says.html

I was also interviewed on the PBS Nightly Business Report on November 14:

DAVID KASS, TEACHING FELLOW, UNIVERSITY OF MARYLAND: It may have raised several eyebrows because it is in the technology area, but when one looks at its very stable and growing cash flows, I think it is not a surprise at all.

The entire transcript for this segment is available at:

http://www.pbs.org/nbr/site/onair/transcripts/warren_buffett_buys_into_ibm_111114/

 Posted by at 6:57 pm

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