And when Warren Buffett speaks, the investing world listens. Here are a few key things likely on his mind:
Berkshire Hathaway, RealMoney's stock of the day, owns 6% of Apple (AAPL - Get Report) , which has rallied 34% this year. News broke of Berkshire's stake in the tech behemoth around April of 2018, and the stock has performed fairly well since -- albeit with volatility. There's been hot debate about how long Apple's broader services business -- it's true growth driver -- will take to reach full potential. Meanwhile, hardware and smartphone sales are largely reaching maturity, and the space is highly cyclical and competitive globally.
But Buffett is a long-term holder of stocks he thinks has solid fundamentals, and one can certainly argue Apple is a good candidate to fit that caliber of a stock pick.
Berkshire also owns some Amazon.com (AMZN - Get Report) shares, Buffett disclosed Friday morning. Amazon is up 27% this year, and Buffett usually isn't into expensive tech companies, which Amazon is, with a forward price-to-earnings multiple of 51. He recently said he understands nothing about the cloud, which comprises much of Amazon's revenue, and he only invests in properties he understands. Boy, is Berkshire's ownership of the stock an endorsement on what the company can produce.
M&A in a Tough Environment
Merger & acquisition activity is not exactly expected to boom in 2019, as the global economy decelerates and experts see tough comparables to the hot 2018 M&A activity (resulting from the tax cut). Still, the S&P 500 has run up 17.4% in 2019, with the average forward earnings multiple on the index near 17, higher than the 10-year average of 14.6. With Buffett being a value buyer, relatively risk-averse, how will his conglomerate operate in the near future?
He gave a hint recently, when it came to Anadarko (APC) being on the trading block. Instead of bidding for the oil company, Berkshire has extended $10 billion of equity financing to Occidental (OXY - Get Report) so it can top Chevron's (CVX - Get Report) bid for Anadarko. This way, Berkshire can limit the capital it puts at risk. Will we see more of that type of strategy for the next few years?
Monitor RealMoney on Saturday to find out.