Does Buffett Think Apple Is Cheap?


We've known since the 2009 annual meeting that Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) chairman Warren Buffett and Vice Chairman Charlie Munger likeGoogle (NAS: GOOG) . Turns out they also like Apple (NAS: AAPL) .

"They're both huge companies. They look very tough to dislodge. I would not be at all surprised to see them worth a lot more money in 10 years," Buffett said from the stage of the CenturyLink Center in Omaha, Neb., yesterday.

(Catch the replay of our live-streamed coverage, or get the crib notes from my Foolish colleague Joe Magyer.)

So Berkshire is buying? No. Buffett said he lacks the conviction to buy shares of Apple. Added Munger: "The only fair thing we can say is that there are lot more people who know these companies. We have the reverse of an edge. What do we know about computer science?"

Something, apparently. Berkshire last year purchased a 5.5% stake in IBM (NYS: IBM) for $10.9 billion. Buffett said from the stage he'd been watching Big Blue for more than 50 years, having read every annual report issued over those five decades.

"I have much less of chance of being wrong about IBM than I do about being wrong about Apple and Google," Buffett said. Translation: Even if he believes Apple trades for a reasonable price, as many do, Buffett senses he lacks the tools -- or, in Munger's parlance, "the edge" -- necessary to evaluate the business for best investing results.

So be it. As much as the tech investor in me wants Buffett to reconsider, it's this very approach -- a staunch refusal to buy anything he doesn't fully understand -- that's led to 52 years of market-crushing performance.

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At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Berkshire Hathaway, Google, and IBM at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Berkshire Hathaway, Google, Apple, and IBM.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway, Apple, and Google and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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