Like millions of us, America’s most-watched investor appears to be embracing the iPhone and iPad, while growing weary of that age-old American past-time, the shopping trip.
Earlier this week, Warren Buffett’s holding company Berkshire Hathaway, disclosed a big hike in its stake in Apple, while all but closing out its decade-plus old position in Walmart. Berkshire — which pegged the total value of its holdings at $148 billion on Dec. 31 — also revealed new and additional investments in several U.S. airlines, an industry Buffett has previously disparaged.
Along with many other retailers, Walmart — America’s largest private-sector employer, with more than 1.5 million workers — has struggled to cope with the rise of online commerce, especially as arch-rival Amazon.com and others push into the grocery business. Buffett, who first bought Walmart in 2005, has been trimming his stake for years. At the end of last year, however, he slashed the remaining stake by roughly 90%, leaving Berkshire with less than $100 million.
By contrast, Berkshire has bet big on Apple recently, roughly tripling his stake to more than $7.7 billion. While Apple is one of the world’s most valuable companies, its shares trade at only 16 times its profit, compared to an average of 20.6 for the S&P 500 as a whole. Just 1% of Berkshire’s portfolio last fall, Apple has jumped to nearly 5%, making it the holding company’s seventh-largest single holding.
Berkshire’s airline investments, now totaling more than $8 billion, include Delta Air Lines, United Continental, American Airlines and Southwest Airlines. Historically, Buffett has been critical of the airline industry, where carriers must pony up enormous initial investment in aircraft and other equipment, and have frequently struggled to maintain profitable ticket prices as travelers focus relentlessly on costs.
Yet despite the industry’s spotty history, filled with high-profile bankruptcies, the moderate oil prices and innovations like baggage fees have lent stability to the business, even as carriers remain relatively cheap.
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While Buffett’s investing decisions can sometimes seem mysterious — he’s not called the Oracle of Omaha for nothing — longtime partner Charlie Munger addressed Berkshire’s moves at a business meeting Wednesday.
“The nice thing about the game we’re in is that we can keep learning,” Munger said, according to Reuters. “He’s changed when he’s buying airlines, and he’s changed when he’s buying Apple. I don’t think we’ve gone crazy … I think we’re adapting.”