Buffett's investors facing more resolutions, like many firms
- Author: Zachary Reyes May 06, 2017,
May 06, 2017, 12:58
Buffett says Berkshire is different, in part because he took Munger's advice to buy wonderful businesses at fair prices. IBM shares have declined 21 percent over the past five years, severely lagging the broader Dow Jones Industrial Average and S&P 500. "I've revalued it somewhat downward", Buffett said. It closed on Thursday at $159.05 on the New York Stock Exchange.
Which is why we were not surprised to learn overnight that Buffett's Berkshire had dumped a third of its stake in IBM in the first explicit sign of declining confidence by the famed investor.
The IBM investment was viewed as a surprise, given Berkshire's longstanding underweighting in the technology sector and Buffett's resistance to investing in businesses he considered more hard to understand.
"Watching someone like (Buffett) with strong command on details of the economy and Berkshire's operations is very impressive", said Meyer Shields, a Keefe, Bruyette & Woods analyst who rates Berkshire "market perform". Buffett did not support his election but Berkshire's book value could swell by $US36 billion with his proposed corporate tax cuts, Barclays Capital said.
Buffett says he estimates IBM is worth less now than it was when he first started buying shares because it faces tough competition. The business accounted for about 45 percent of total revenue. Why then, is Buffett offloading stakes in the company?
"This may put some pressure on management to be more aggressive in returning to growth", Anurag Rana, a Bloomberg Intelligence analyst, said in an email. Bezos was less than $3 billion behind Buffett. 'But you're not going to learn a lot about Berkshire Hathaway the company'. Buffett was previously on the board of the Washington Post Co., and the stock was one of his best investments.
"We're taking time to make sure we invest in the right places and make sure we get the kind of margin high-value profile we're looking for".