As the best investor in the world, people are constantly watching Warren Buffett to see what he’s doing. Which companies is he investing in? Which ones is he dropping? Should everyone else follow suit? The articles debating about his choices and evaluating his decisions are endless.
So it should be no surprise that in 2011 when Buffett started buying shares in IBM, and then continued to increase them in the next few years, the investment community was abuzz. IBM’s stock prices were not doing well and from the time Buffett invested, slowly dwindled down to $120 per share in 2016. However, we all know that Buffett invests in companies for the long run.
“What you pay for a stock doesn’t mean anything,” Buffett told CNBC last year in an interview about IBM. “What means something is where the company’s going to be in five to 10 years. I think IBM will be worth more money but, like I said, I could be wrong but we’ll accept that.”
And, once again, it’s starting to look like Buffett might be right. In the last year alone, the prices have begun to rise again, and at the time of writing, were only a few dollars short of the average per share ($170) that Buffett purchased the stock. While breaking even on a stock is not the same as making profit, it’s at least a step in the right direction.
Why does Buffett like IBM?
Buffett normally stays away from tech stocks because he reportedly doesn’t understand them. But, while IBM does deal in technology, it’s a bit more hardware which is something that Buffett can understand enough to evaluate.
He also told interviewers in 2011 that he liked that IMB laid out clear road maps and executed them—something Buffett himself does with his own companies. They also have a habit of buying back stocks, which may be where Buffett is planning on making his money. Regardless, the company isn’t quite as unusual for Buffett as you might think.
Only time will tell whether Buffett will, once again, outsmart the market and make another prediction that will make him tons of money while the rest of the investing world scratches their heads and scrambles to keep up.