Warren Buffett quadruples investment in Apple and boosts stakes in airlines

To make room for new investments, Berkshire appeared to have shed nearly all of what remained from a more than decade-old stake in retailer Wal-Mart

The billionaire investor also boosted stakes seed maker Monsanto and Sirius (Getty)

Warren Buffett's Berkshire Hathaway was an aggressive buyer of stocks in last year's fourth quarter, nearly quadrupling its stake in Apple and increasing its stake sevenfold in the four biggest US airlines.

In a regulatory filing, Berkshire reported owning 57.4 million shares of Apple as of 31 December that would now be worth $7.74bn, up from just 15.2 million shares in the iPhone maker three months earlier.

Berkshire also reported a $9.3bn airline stake, with investments topping $2.1bn in each of American Airlines Group, Delta Air Lines, Southwest Airlines and United Continental.

It also disclosed new stakes in satellite radio company Sirius XM Holdings and seed company Monsanto, which is being bought by Germany's Bayer.

Though it is unclear who made which investments, the filing appears to reflect much of the $12bn of stock that Buffett said he had bought between the presidential election and the end of January.

Larger Berkshire investments such as Wells Fargo, Coca-Cola and International Business Machines are normally Buffett's, but the 86-year-old billionaire has given his deputies Todd Combs and Ted Weschler more to invest over the years.

Berkshire's initial investment in Apple got attention last year, given Buffett's usual aversion to technology companies – apart from IBM – which he considers outside his zone of competence.

The new, larger stake makes Berkshire one of Apple's 10 biggest investors.

“I'm stunned to see the size of that Apple position,” said Thomas Russo, who oversees $11bn of assets, including 12 per cent in Berkshire, at Gardner Russo & Gardner in Lancaster, Pennsylvania.

Berkshire did not respond to a request for comment.

The Omaha, Nebraska-based conglomerate also owns roughly 90 companies such as the BNSF railroad, Geico car insurance and Dairy Queen ice cream.

Its Class A shares closed on Tuesday up $2,078.95 at $250,419, a record high closing price and less than 0.2 percentage points below its all-time high on 14 December.

The plunge into Apple appears particularly well-timed.

Shares of Apple closed on Tuesday up $1.73 at $135.02, also a record closing high.

Assuming Berkshire has not sold its stake, Apple's 16.6 per cent gain this year would leave it with a $1.1bn paper profit in 2017 alone.

It had been widely believed that Berkshire's initial investment came from Combs or Weschler.

But their decisions have sometimes influenced Buffett, as when Berkshire last year paid $32.1bn for aircraft parts maker Precision Castparts, once a Combs investment.

“It's quite possible that Warren woke up and began to understand the virtues of Apple that he had been neglecting or, like with Precision Castparts, Todd or Ted had an affinity for Apple that sparked interest from Warren,” Russo said.

Combs and Weschler are the leading candidates to eventually succeed Buffett as Berkshire's chief investment officer.

The airline investments, meanwhile, suggest that Buffett has overcome his two-decade aversion to the sector after an unhappy – though, he has said, profitable – investment in US Air Group.

Buffett told talk show host Charlie Rose in an interview last month that it was “in large part” his decision to dive back into airlines.

“The industry was once balkanised, but now it is bulking up, and has come to realise that an empty seat is a perishable asset,” Russo said. “More planes are travelling more full.”

Shares of American, Delta, Southwest and United, as well as Apple, Monsanto and Sirius, rose in after-hours trading.

Such increases often occur when investors perceive that Berkshire has given a company its imprimatur.

Monsanto and Sirius did not immediately respond to requests for comment.

To make room for new investments, Berkshire appeared to have shed a $1.8bn stake in agricultural equipment maker Deere & Co and nearly all of what remained from a more than decade-old stake in retailer Wal-Mart Stores.

Reuters