Why is Warren Buffet loading up on IBM stock?
Warren Buffet has avoided technology stocks – until now. Why is Warren Buffet spending $10.7 billion on IBM stock?
Warren Buffett said his Berkshire Hathaway Inc has accumulated a 5.5 percent stake in IBM, the billionaire investor's biggest bet in the technology field he has historically shunned.
Buffett said he was convinced by IBM's long-term roadmap and by its entrenched position with major businesses -- part of the durable competitive advantage that he looks for when investing in a company.
"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," Buffett told CNBC in an interview on Monday.
The move puts Buffett's money squarely in the heart of the technology industry, a sector he has steadfastly avoided on the grounds he simply did not understand it.
One long-term Berkshire investor said the investment was a global play.
"More confirm(ation) that he sees international as more important," said Michael Yoshikami, chief executive of wealth manager YCMNET Advisers, which manages about $1 billion and holds Berkshire shares.
Buffett said he had bought about 64 million shares of IBM, paying $10.7 billion. Berkshire started buying the shares in March, with a goal of building a $10 billion position, he said.
Buffett said IBM did not know that he was building a stake and that the company was finding out about his investment for the first time as he disclosed it on television.
An IBM spokesman declined to comment.
Buffett said he has always looked at IBM's annual report -- his preferred method of identifying companies to invest in -- but this year "I read it through a different lens."
He said follow-on conversations with various technology executives throughout the Berkshire conglomerate convinced him to start building the stake.