Warren Buffet is Finally Investing in Apple

Plus: Goldman Sachs is turning bullish on oil

Warren Buffet
Paul Morigi / Stringer / Getty Images

Warren Buffett’s Berkshire Hathaway (BRK.A) disclosed in a regulatory filing that it took a $1B position in Apple (AAPL), its first ever in the iPhone maker. Shares were trading just about 2% higher on the news, edging the Nasdaq higher following four weeks of losses on recent weakness in AAPL. Buffett also added to stakes in International Business Machines (IBM), Deere (DE) and Visa (V).

Last month Apple reported its first quarterly drop in 13 years on softness in iPhone sales and concerns that the iPhone 7 could experience a sales decline.

Through Friday, shares were down 14% on the year, so this looks like a value play for Berkshire Hathaway. Buffett has typically shied away from making bets in technology companies (and indeed, one report suggests that it was one of Buffet's "lieutenants" making the bet on Apple).

While the filing does not disclose what price or date Berkshire Hathaway purchased Apple, one can assume that Buffett already has a loss in the position, since Apple has dropped by $16 since the end of March.

Other big players don’t share Berkshire’s optimism on Apple. David Tepper’s Appaloosa Management disclosed last week that is sold out of its Apple stake in the first quarter, and Carl Icahn said in April that he exited his Apple position on concerns about its relationship with China.

“From a sentiment standpoint, investors continue to look for reasons not to own AAPL rather than the other way around, despite the stock hitting fresh lows,” analysts at CLSA stated in a research note.

Oil Bear Turns Near-Term Bullish

Berkshire Hathaway isn’t the only big market mover to take a surprising bullish position this week. In a research note, the Commodities Research Group at Goldman Sachs struck an optimistic tone on oil.

“The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected and we are pulling forward our price forecast," it wrote.

 

Goldman has been a longtime bear on oil, and the pronouncement, combined with growing Nigerian output disruptions, cause crude oil prices to jump over 2% to almost $49, the highest level since November. Energy shares were leading the way higher in early trade in the Dow Jones Industrial Average and S&P 500.

A Look at the Trading Week Ahead

Investor focus shifts to the G7 Finance Ministers and central bank governors meeting late next week in Japan. The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. On the agenda will be Central bank policy and the risk that UK could leave the European Union in June.

Following strong retail sales data, investors will look to see if that strength spilled over in the housing market when Housing Starts and Existing Home Sales reports will be released. These powerful pieces of data have a strong impact on the economy and will give more clues into the strength of the consumer. Other key data include the Consumer Price Index (CPI) and Federal Open Market Committee (FOMC) minutes. While investors do not expect a change in the minutes from the last FOMC meeting, the release at 2pm ET on Wednesday will move the markets as traders pick apart each word looking for clues to monetary policy.

Most of the S&P 500 has reported earnings for Q1, but there are still several retailers on the calendar including Home Depot (HD), TJ Maxx (TJX), Lowe’s (LOW), Target (TGT), Urban Outfitters (URBN), Dick’s Sporting Goods (DKS), Wal-Mart (WMT), Gap Stores (GPS) and Ross Stores (ROST). Expectations are for continued weakness in traditional brick and mortal stores and strong reports from the discounters. Home improvement stores are also expected to have a good showing: Analysts at Jefferies expect strong results for Home Depot and Lowe’s reflecting a favorable spending backdrop for the industry and early start to the remodel/construction season due to warmer weather early in the first quarter.

Jill Malandrino is the Voice of America's New York Bureau, focusing on global macro trends and commodities. She can be followed on Twitter @OptionsProfits