Widely known to avoid buying technology stocks, billionaire investor and Berkshire Hathaway CEO Warren Buffett has revealed that his company paid US$10.7 billion to purchase 64 million shares, or 5.5 per cent of IBM. He pointed to Big Blue's strong roadmap, saying that it manages its stock with "reverence".
"They have laid out a roadmap, and followed it extremely well. I probably read the annual report of IBM every year for [the past] 50 years," Buffett said, during a televised CNBC interview on Monday. "They are thinking about the shareholders. They treat their stock with reverence, which I find is unusual among big companies," he added.
While Buffett started buying IBM stock around March, most of the 64 million shares were acquired by Berkshire during the third quarter of this year, according to Reuters. The news wire added that Berkshire did not cross reporting thresholds on the investment until the third quarter, which let the billionaire investor keep the stake secret until Monday.
According to Reuters, even IBM was unaware of the investment and its potentially largest shareholder, until he finally revealed the news on television. "I don't know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM," he said before making the announcement.
Buffett's IBM stake is notable, considering that the technology sector had been one area that the billionaire investor had famously and openly shunned on grounds that he did not understand it, by his own admission.
According to the CNBC interview, Buffett himself admitted that he should have paid more attention to IBM five years ago.
Technology analysts, nonetheless, argue that he still got a "good deal". Collins Stewart analyst Louis Miscioscia told Reuters: "Maybe he could have gotten a better price ... but if you look at Warren Buffett's investment policy, I would assume this is a long-term investment. This is not your father's IBM; the management has done a good job of cost control, returning cash to shareholders."
Michael Yoshikami, chief executive of YCMNET Advisers, which is a Berkshire shareholder, added that the investment was a global play for its services businesses, and Buffett "sees international as more important [than the technology]."
IBM, which celebrates its 100th anniversary this year, will see its first female chief executive officer in January 2012, when global sales chief Virginia Rometty takes over current CEO Sam Palmisano at the helm.
Via ZDNet Asia