Technology

What Warren Buffett Really Bought With More IBM Shares

Maybe International Business Machines Corp. (NYSE: IBM) is unloved by the market, but the world’s wealthiest man is apparently sticking by his guns on IBM. In a CNBC appearance in which Warren Buffett touted that Berkshire Hathaway Inc. (NYSE: BRK-A) is acquiring Precision Castparts Corp. (NYSE: PCP), he hinted that he has acquired more shares of Big Blue.

Buffett did not come right out and say that he bought more shares, but that is how his words have been interpreted. Buffett was asked how he felt about IBM’s performance and his answer was what he essentially has said before: I love it when a company’s stock goes down.

On top of added share buybacks, Buffett said he likes to add to positions when share prices dip. He also said that his cost basis in IBM is roughly $170 for the position. As noted by 24/7 Wall St. at the time of the poor IBM earnings report, it almost seemed as though the company had every aspect to blame for its report. Buffett made no mention on Monday of whether he thinks CEO Ginni Rometty’s job is being questioned enough to bring up a replacement yet.

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Berkshire Hathaway released its earnings for the second quarter of 2015 on Friday, and the 10-Q filing with the Securities and Exchange Commission indicated that the IBM stake was valued at $12.9 billion as of June 30, up from the $12.3 billion at the end of 2014. These are rounded numbers of course, so the implied share count would be 79.965 million shares, based upon a June 30 closing price of $161.32, and the March 31, 2015 holdings, released on May 15, showed that the IBM stake was just over 79.5 million shares at that time.

Buffett has hinted at buying more and more IBM shares before, and this would mean it was only about 400,000 shares, without trying to interpret any round errors. Still, here is how Buffett has added to the IBM stake in recent quarters: The actual stake at March 31 was raised yet again, to just over 79.5 million IBM shares, versus the end of 2014 when it was 76.971 million. That was up from 70.478 million shares at the end of the third quarter of 2014, and versus 70.173 million shares as of June 30, 2014.

The 2015 bull and bear case for IBM from 24/7 Wall St. called for IBM to rally almost 8%. So far, IBM’s share performance is as follows: -1.1% year to date in 2015, -13.3% over the past year, -9.4% in the past 90 days and -4.5% in the past month.

IBM shares were up 0.8% to $156.35 right after the opening bell on Monday. The stock has a 52-week trading range of $149.52 to $195.00, and its consensus analyst price target is now right at $160, about $10 shy of Buffett’s self-said cost basis on his average dollar cost of IBM shares.

Here is what you get in a stark night and day difference of analyst opinions when you compare the most bullish call and the most bearish call in IBM since its earnings report.

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