Warren Buffett's Berkshire Hathaway Inc (BRKa.N) revealed a more than $1 billion stake in Apple Inc (AAPL.O), a rare foray into the technology sector that the billionaire has largely shunned, apart from a poorly performing investment in IBM (IBM.N).
Shares of Apple got a boost from the Berkshire imprimatur, rising more than 3 percent on Monday. Berkshire made its investment in the first quarter, before the iPhone maker in April reported its first quarterly revenue decline in 13 years.
The investment came despite the increasing view among investors that Apple may deserve a lower valuation because its heady growth days may be over, though Berkshire has long favored companies with strong balance sheets and management.
In a regulatory filing detailing most of its stock holdings, Berkshire said it held 9.81 million Apple shares worth $1.07 billion as of March 31.
The value has since fallen into the low $900 million range. Berkshire's largest technology bet has been Buffett's $12 billion stake in International Business Machines Corp.
Apple stock "is stunningly cheap, and it has a massive pile of cash," said Steve Wallman, founder of Wallman Investment Counsel in Middleton, Wisconsin, who has owned Berkshire since 1982 and Apple since 2003. "Apple is not getting credit for research and development it is doing behind the scenes."
An Apple spokeswoman did not immediately respond to requests for comment. In afternoon trading, Apple shares were up $3.20, or 3.5 percent, at $93.72.
Buffett did not make the Apple investment himself, his assistant confirmed in an email to The Wall Street Journal, meaning that it was made by one of his stockpicking deputies, Todd Combs and Ted Weschler.