Warren Buffett says Apple's iPhone is 'enormously underpriced'

Gerardo Harmon
September 1, 2018

Earlier this year, Buffett teamed up with Jamie Dimon and Jeff Bezos.

The conglomerate run by billionaire Warren Buffett confirmed in an email that Berkshire had invested in One97 Communications Ltd. Buffett was not involved in the transaction, his assistant Debbie Bosanek said in the email, without giving more details. The investment is worth more than US$50 billion and makes Berkshire the third-biggest shareholder in Apple, according to data compiled by Bloomberg.

Buffett remains very bullish about Apple, and told CNBC that he has bought "just a little bit" more Apple stock in recent months.

The Oracle of Omaha, famed investor, and head of Berkshire Hathaway, Warren Buffett, is adding to his already large stake in Apple. For customers, "the iPhone is enormously underpriced" compared with the utility it offers, he said.

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Berkshire said the policy frees Buffett and Vice Chairman Charlie Munger to repurchase stock when the price was below Berkshire's "intrinsic value", a determination that would be made "conservatively".

With this deal, Buffett's investment firm joins Japanese giant SoftBank that had past year bought a reported 20 percent stake in Paytm for an estimated $1.4 billion (over Rs 9,000 crore). The value of Berkshire's stake in Apple is over $54 billion and that in Wells Fargo is $24 billion.

It has been a busy year for Combs, who has also been heading Berkshire's efforts to start a healthcare joint venture with Amazon.com Inc and JPMorgan Chase & Co. In June, the group named Atul Gawande to lead the initiative, which will be based in Boston.

Gawande is in the process of adding staff now.

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Markets: Stock markets continue to hit records, but Buffett said he prefers equities over fixed income and reiterated his long-term view.

For example, an investor can buy a duplex and rent out property and "do fine over time", or purchase a bond and collect a 3-percent yield, Buffett said.

Buffett also said investors are better off owning a basket of stocks than long-term bonds as a strong US economy bolsters corporate profits, despite higher costs from tariffs.

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