Warren Buffett takes a big bite of Apple

SAN FRANCISCO — Warren Buffett has a tried-and-true formula of investing based on value, and last year, Apple fell into the Buffett bucket.

The investor's Berkshire Hathaway quadrupled its investment in Apple to 57 million shares in the fourth quarter, according to a securities filing late Tuesday. That's after the iPhone maker, once beloved as a momentum stock, had fallen 30% from its all time high set in 2015. IPhone shipments and overall sales were falling, and investors worried the smartphone market was saturated.

The Berkshire investment paid off: It came ahead of a surge in Apple shares, which helped lift the Dow Jones industrial average past 20,000 and the S&P 500 and Nasdaq Composite to record highs in the first quarter. Apple, the largest stock by market cap, has gained 17% since the end of the year and closed at a record high Tuesday.

Apple shares were up slightly, at $135.31 per share, in trading on Wednesday.

Berkshire not only snapped up shares of Apple, but significantly raised its stakes in U.S. airlines American, United and Delta. Meanwhile, it dumped shares in Walmart (a $900 million sell-off), Verizon and Deere and made new investments in Monsanto and Sirius, according to a regulatory filing of its U.S. stock portfolio with the Securities and Exchange Commission on Tuesday.

But the Oracle of Omaha's biggest splash was with Apple, which reported a jump in iPhone sales and overall revenue in its December quarter last month, breaking a three-quarter streak of year-over-year declines.

Berkshire's stake in Apple, worth nearly $8 billion, makes it one of the company's ten-largest investors, according to S&P Global Market Intelligence.

Apple had no comment on Buffett's investment.

Apple shares have benefited from a hot stock market and sharp growth in iPhone sales and Apple Services — a $7.2 billion division that Apple expects to double in four years, says Angelo Zino, an analyst at CFRA Research.

"There is reason for hype (around Apple shares) in anticipation of the next-generation iPhone (in September), rising expectations for Apple Services and potential tax reform" through the repatriation of offshore revenue proposed by the Trump administration, he says.

Buffett's bearish, and rare, investment in a tech stock such as Apple underscores a fundamental shift on that stock — to value-oriented investors such as Berkshire from momentum-influenced investors such as hedge fund managers, Zino says.

Apple could also reward investors with its latest iPhone — analyst Jack Gold says the model, rumored to come with facial recognition later this year, is the most anticipated since iPhone 6 in 2014 — and improved business in India. The company has plans to build or co-build a manufacturing operation in that country, Gold says.

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