SAN FRANCISCO: Apple Inc was not the only one to leap on a chance to buy its stock at a fat discount last quarter as Warren Buffett stepped in to scoop up an additional 75 million shares for Berkshire Hathaway at the same time.
Between them – the two biggest players in the iPhone maker’s shares – they bought nearly one of every 10 Apple shares traded during the quarter.
But the discount window did not stay open long, with Apple’s stock back at a record high above $183 on Friday after trading in the mid-$150s for part of the first quarter.
The recovery in the share prices makes it less opportune for Apple’s corporate treasury to execute purchases as it proceeds with an additional $100 billion of buybacks in an effort to further winnow down its mountain of cash.
Apple bought more than $23 billion of its own shares in the first three months of the year at an average price of $171.48, the company said this week. A Buffett representative on Friday confirmed Berkshire Hathaway increased its stake in Apple by 75 million shares, for which the company looks to have paid between $12 billion and $13 billion, based on the stock’s trading range during the period.
Funds from the repatriation of Apple’s $252 billion overseas cash hoard arrived at a convenient time for traders working on behalf of Apple. The Cupertino, California, company’s massive share purchase in the March quarter coincided with a 10 percent slump in the S&P 500 between Jan 26 and Feb 8.
That drop raised fears across Wall Street that a nine-year bull market was ending and made it easier for big players amassing shares in a company to find willing sellers.
Apple shares fell even more than the broader market, tumbling over 13 percent from their record high close. But while the S&P 500 has remained in correction territory, Apple shares quickly recovered, and it seems the company and Berkshire were there to help.
Buffett, a billionaire bargain hunter, increased his company’s stake to 240.3 million shares worth $42.5 billion during first quarter.
At its low in February, the stock was available for as little as $150, an 18 percent discount to its current price.
On more than a third of the trading days during the March quarter, Apple’s stock traded below its volume-weighted average price, or VWAP, for the prior 60 days.
On Feb 8, when it closed at $155.15, the low for the quarter, it was at a nearly 10 percent discount from its 60-day average VWAP. The stock had not been available at such a large discount to its prevailing average since May 2016, which happens to be when Buffett bought his first-ever shares of Apple.
At its close of $183.83 on Friday, however, Apple now stands at a premium of nearly 7 percent to its 60-day VWAP of $172.11.
Prior to last quarter, Apple’s largest-ever quarterly repurchase occurred in early 2014, a year after it initiated its first $210 billion buyback program. The stock traded at a discount to its 60-day VWAP through much of the quarter, and Apple spent $18 billion to buy up its own shares, according to filings.