Buffett cuts stake in IBM and shares slide

I don't think Buffett's advice of being greedy when others are fearful would best suit long-term investors at the moment.

Berkshire Hathaway still owns over 50 million shares of IBM and Buffett said he has stopped selling.

Buffett says he estimates IBM is worth less now than it was when he first started buying shares because it faces tough competition.

Year-to-date, IBM has lost about 4.18% in value, and its last quarterly earnings report showed that the company's revenues have fallen for 20 straight quarters in a row.

Buffett told CNBC on Thursday he sold about one-third of Berkshire's 81 million share stake in IBM this year, and no longer values the computer services company as highly as before.

Billionaire investor Warren Buffett sold part of his stake in International Business Machines Corp.

For the US property and casualty insurance industry, catastrophe losses in the first quarter are expected to be the highest for this time of year on record because of tornadoes and large storms.

Berkshire's share price has slightly lagged the Standard Poor's 500 including dividends during the eight-year bull market, but has outperformed since the global financial crisis mushroomed in September 2008.

This, after all, is the sage who missed the internet boom by telling his flock in 1998, "Technology is just something we don't understand, so we don't invest in it".

Without the Buffett buffer, IBM may receive more scrutiny around when they'll reach that inflection point.

There are no signs that anything is on the immediate horizon, but they can't resist fixating on the record amount of cash piling up at Buffett's Berkshire Hathaway Inc. - conceivably enough to manage a transaction with a 12-figure price tag. His company also amassed stakes in the four largest USA airlines - American Airlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co. and United Continental Holdings Inc.

Two days ago, Moody's downgraded IBM's senior unsecured rating.

The company's price to book ratio has receded to near its 2011 level while price to earnings growth has increased by about 75 per cent.

  • Zachary Reyes