Warren Buffett's Berkshire Hathaway makes a huge bet on Apple

Last Updated May 4, 2018 5:15 PM EDT

Billionaire Warren Buffett made a huge bet on Apple, adding 75 million shares to his existing position of more than 165 million shares. At current prices, the stake is worth more than $44 billion.

The iPhone maker now becomes Berkshire' second-largest position behind Wells Fargo.

Though the Oracle of Omaha is considered by many on Wall Street to be one the greatest investors in history, his track record in the technology sector has been mixed. Buffett told CNBC on Friday that he had liquidated his position in IBM, which he began amassing in 2011 when Big Blue was struggling. IBM continues to face challenges and recently gave investors disappointing earnings guidance. 

Shares of Apple closed at an all-time high on Friday of $183.83. Wall Street analysts believe Apple may have more room to run, with their average 52-week price target on the stock at $194.49. According to CNBC, Berkshire Hathaway will earn about $700 million annually in Apple dividends.

"He picked a golden time to pick up shares heading into a massive product cycle and buyback bonanza," wrote Daniel Ives, GBH Insights' chief strategy officer, in an email.

For its part, Apple is "thrilled" to have Buffett as one of its significant holders, according to a statement CEO Tim Cook gave CNBC.

"On a personal level, I've always greatly admired Warren and have always been grateful for his insight and advice," Cook told the business news channel.

The investor is expected to elaborate further on his Apple investment during this weekend's Berkshire Hathaway annual meeting in Omaha. Dubbed the "Woodstock of Capitalism," the meeting attracts thousands of shareholders and features the release of Buffett's annual letter to shareholders.

"Apple has one of the world's greatest business franchises," said Thomas Russo, a money manager with Gardner, Russo & Gardener of Lancaster, Pennsylvania, which owns Berkshire shares among its $14 billion in assets, in an interview. "Once you are in a relationship with Apple, it's an ongoing, lifelong (one), and that's extremely valuable."

According to Russo, the decision to switch from IBM to Apple underscores Buffett's willingness to liquidate positions in stocks that are performing poorly. 

Though Buffett has delegated some of his duties in helping pick stocks to deputies Todd Combs and Ted Weschler, he appears to have reached his own conclusions about Apple. 

Speaking to CNBC, the 86-year-old offered effusive praise for Apple, calling it an "unbelievable company" that earns almost twice as much as the country's second-most profitable company, JPMorgan Chase. He also took exception to Wall Street's concerns about iPhone X sales, which were quelled by Apple's recent strong quarterly results.

"The idea that you're going to spend loads of time trying to guess how many iPhone X ... are going to be sold in a 3 month period totally misses the point," Buffett told the cable news channel. "It's like worrying about the number of BlackBerrys 10 years ago."

  • Jonathan Berr On Twitter»

    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.