Berkshire Hathaway is a company that needs no mention of its achievements and how big it has made in the insurance and every sector possible. This company not only specializes or has a strong foothold in one sector but it goes beyond to rule a lot of subsidiary companies like the GEICO, BNSF, Lubrizol, Diary Queen, NetJets, FlightSafety International and others.
The company’s current CEO is Warren E Buffet and he is leaving no stone unturned to bet higher stakes and increase the value of the companies that he truly believes can make it big and some of these companies include IBM. The recent talk of the town is the news that Buffet has gone onboard to increase the stakes of Hathaway’s IBM stakes by $400 million. The company being the fifth largest company in the world is known to have made investments in some of the best companies and the latest one being IBM. The mega company IBM has recently not shown any signs of going big or garnering big responses in the market, but with the intervention of Buffet, the company might see some good news coming their way.
IBM has been going steady at a share price for $160 million per quarter but for the recent quarter, its shares have been increased by the company and Berkshire Hathaway has been a game changer for the company with increasing its share price up to $400 million. It has beefed up around 2.6 million shares of the company, and these statistics will only increase with the time to come. Buffet has certainly taken a big leap and he has mainly gone for the rough bet because IBM was for a long time seen by the stock market as a good buy and not a company to be invested in; this was mainly due to the negative growth in revenue which has been a constant factor in the description of IBM for a long time now.
How will Buffet and his company benefit from this big leap? Well, for starters, Berkshire Hathaway already has 79.9 million shares of the company, and the stakes are much higher. So, if IBM is making any money (which it will, or else why would Buffet invest in it), the major beneficiary will be the Berkshire Hathaway.
And this is what IBM is currently doing. The company had been an underperformer for the past year with only 14% shares, but this year they are buying back their stocks and shares, and this is what makes Buffet happy. Now, if IBM buys all their shares back, then they will benefit as they will have all the major shares of the company going up the shares of Berkshire Hathaway will increase automatically. So, in a way, the gain and the profits will be of Buffet’s company that is what he was able to see and others are still criticizing him for.
This year’s annual meeting took place and discussions were held. The Buffet was pressed and told to shed light on his investments in IBM. While Buffet chose not to speak any further on this topic, his long time investment partner Charlie Munger just said that IBM is a wonder company, and there is a lot to come from this single mega giant.
There have been a lot of analyses already been done on the subject, and IBM is not soaring on its market value, but it is showing a lot of improvement on its equity rates. The statistics prove that instead of impressing the Wall Street and performing wonders there, IBM is bent on making the equity good and give results there. The result is great, and IBM has, in fact, performed in an excellent way. The stock prices have gone up, and the buyback program of IBM is also another thing that might help the company in saving itself in the long run. Although the buyback program is also not in the good books of the Wall Street officials this program has helped IBM boost its equity and share price. The next major boost is coming in the form of investment that Buffet’s company will be making. The stock price of the company has gone up from $112 to $160.2 in the recent year when the statistics were noted back in 2007. This and many other such factors will boost the revenues and the bet made by Warren E Buffet might turn out to be a beneficial one for him and his company, Berkshire Hathaway.
The company has made bets and investments in the past that were not supported or looked as good, but the end results were definitely astonishing. This investment will be one of those, well, that only time will tell.