If you asked the average Warren Buffett follower, just a short 10 years ago, if he would invest in technology, they would have said, “no way, never”.
In the last few years, Warren has invested heavily in IBM, which is trading at a cheap 11X earnings and a 95% ROE. In the last week, a news story came out that he was in the bidding for Yahoo. And today, Berkshire Hathaway has bought a stake in Apple, which trades for 10.5X earnings and a 49% ROE.
When you see a cheap company throwing off lots of cash, sometimes, it’s a no-brainer.
Apple’s stock is cheap, according to two measures used by Buffett, writes Phil van Doorn.