REASONS – WARREN BUFFET – CHINA REBOUND – OVERSOLD CONDITION – BUYBACK PLAN
TAKE A BITE OUT OF THIS
Summary – Why Buy Apple
Apple appears oversold and likely to rebound within 2019. There are similar historical situations and this selloff appears to be at least partially related to that cycle. Day Trader
Berkshire Hathaway’s acquisitions should provide a floor to share price, and the company will provide updated information through SEC filings.
Apple is likely to maintain or increase the company’s enormous share buyback plan and increase the dividend. Apple will continue to eat up the float.
China , once the tariff situation is resolved, and we feel that it will be shortly, the boycott and purchase of Apple products in China will begin again. A stronger than ever demand for Apple’s superior products will resume once again driving these shares much higher
Double bottom formed and a test of the upper channel at $158 will trigger massive short covering .
Apple’s (AAPL) 2019 may end up looking like 2013 and 2016, both of which provided investors with excellent opportunities to acquire shares in the first half of those years. This recent decline supports an apparent recurring cycle affecting Apple share valuations that I believe is consistently related to the company’s product line and emerging market demographics. Like the prior instances, this should present a better than average long-term investment opportunity.
There are also different accompanying forces this time due to the addition of Berkshire Hathaway as a major holder and the significant stock buyback plan increase that Apple instituted in 2018. Each of these is likely to be a continuing supportive feature that is unlikely to go away any time soon.
Buffett Buying, Holding & Probably Buying Again
According to Berkshire Hathaway’s 13-Fs (most recent here), it purchased around 240 million shares of Apple stock between 2016 and the end of the first quarter of 2018 at prices between about $90 and $180. Of that 240 million, about 130 million were acquired before Q1 2018 and therefore acquired at prices below around $145, and some of the other 110 million shares were probably not much higher priced. Berkshire’s cost basis on Apple at the end of 2017 was about $126 per share.
Berkshire added only 522,802 shares of Apple in Q3 of Apple in the last reported quarter, Q3 of 2018, down from around 12 million in Q2 2018, indicating Buffett significantly slowed down or stopped buying Apple shares at or around the $180, and possibly considerably lower. Information on Q4 is not yet available, and Q1 2019 info will not be available for months, though Buffett may make a comment after Berkshire reports earnings. Nonetheless, it appears probable that Berkshire will continue to hold its current shares and acquire more significant quantities of new Apple shares when at a nicer price. I think Apple is within his nicer price range here. Reporting will tell.
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