Tags: warren buffett | stock price | invest | ibm

IBM's Stock Plunge Defies Buffett Practice

IBM's Stock Plunge Defies Buffett Practice
Warren Buffett (Getty)

Friday, 22 January 2016 08:05 AM

Warren Buffett’s willingness to buy shares of International Business Machines Corp. as their price falls may soon be put to the test.

As the chart below shows, IBM’s stock costs less than it did when Buffett’s Berkshire Hathaway Inc. started building its stake in 2011. The computer-services company slid to its lowest level in more than five years Wednesday in response to a disappointing earnings forecast for 2016.

Berkshire was IBM’s largest stockholder as of Sept. 30, the most recent data available. The Omaha, Nebraska-based company had just over 81 million shares, or an 8.4 percent stake. The total includes 12.9 million purchased between the start of 2014 and the end of last year’s third quarter, a period when the stock fell 23 percent.

Should Berkshire raise its IBM stake now, it won’t be the first addition to a top holding in 2016. Buffett’s company bought 8.3 million shares of Phillips 66 during the first two weeks of the year, according to regulatory filings. The purchases brought its stake to 69.8 million shares, or 13 percent. It’s the largest shareholder in the oil refiner, which is based in Houston.

Phillips 66 was Berkshire’s sixth-largest equity investment as of Sept. 30, with a market value of $4.7 billion, according to data compiled by Bloomberg. IBM, based in Armonk, New York, was among five valued at more than $10 billion.

The retreat in IBM’s share price since 2011 contrasts with gains for three more top holdings — American Express Co., Coca-Cola Co. and Wells Fargo & Co. — and also the Standard & Poor’s 500 Index, as displayed in the chart. The other $10 billion-plus holding was Kraft Heinz Co., formed in a July 2015 merger.

IBM’s operating earnings this year will be at least $13.50 a share, Chief Financial Officer Martin Schroeter said Tuesday on a conference call. Analysts were looking for a profit of $15 a share on average, according to a Bloomberg survey.


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Warren Buffett's willingness to buy shares of International Business Machines Corp. as their price falls may soon be put to the test.As the chart below shows, IBM's stock costs less than it did when Buffett's Berkshire Hathaway Inc. started building its stake in 2011. The...
warren buffett, stock price, invest, ibm
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2016-05-22
Friday, 22 January 2016 08:05 AM
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