Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) is believed to have seen a slump in returns because of the 7.09% (according to CNBC) stake in International Business Machines Corp. (NYSE:IBM), which saw its stock price plummet throughout the last 30 days. Considering that for the American Express Company (NYSE:AXP) the stake at hand represents 14.68% in the same portfolio and the company gained little to 9% this month, one might infer that Warren Buffett won’t see his profits drop below zero. TheStreet suggested that a buy-back can break even gains from International Business Machines Corp. (NYSE:IBM) shares.
“Over the last month IBM shares have taken a beating and the stock loss more than 10%. Shares are down 12% so far this year, making the company one of the loss leaders in the Oracle of Omaha massive portfolio. IBM stock really diverged from the upwards trajectory of the S&P over the last 12 months, but a big buyback could be a boost for shares,” said Jonathan Marino.
International Business Machines Corp. (NYSE:IBM)’s once lucky bet in personal computers proves to be a burden these days, because most of technology goes into mobile. Virginia M. Rometty has pursued some projects into the new sphere of technological development, but the whole process can be rendered cumbersome, at best. Thus, the best short term solution for the company to tilt the stock price in its favor is to engage in a buy-back process. This strategy alone won’t solve all of International Business Machines Corp. (NYSE:IBM)’s problems, but it will give some time to get the business running strong again.
“The company’s expected to buy back more than $5 billion of its own stock as recently announced. Factoring that plus new partnerships with tech companies like Apple Inc. (NASDAQ:AAPL) for Cloud tech and Twitter Inc (NYSE:TWTR) for analytics,” informed Jonathan Marino.
Warren Buffett is known to be a white knight in terms of activist investment, so most probably, he will not be too aggressive to urge International Business Machines Corp. (NYSE:IBM) into the repurchase, however everybody has a limit to his or her patience.
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