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Warren Buffett’s Heirs Bet on Apple

Warren Buffett’s Berkshire Hathaway Inc. disclosed Monday that it had made a $1 billion bet on Apple Inc. stock earlier this year, boosting the iPhone maker’s market value by more than $18 billion.

But to the cottage industry that fervently follows the world’s most famous investor, it just didn’t seem like a move Mr. Buffett would make.

It wasn’t, as it turns out. Instead, it was among the largest investments yet by the two former hedge-fund managers that Mr. Buffett brought on board as potential successors to run his company’s $129 billion stock portfolio.

Mr. Buffett has long voiced his aversion to investing in technology companies. Four years ago, he specifically ruled out investing in Apple.

But Todd Combs, who joined Berkshire in 2011, and Ted Weschler, who arrived a year later, have shown a willingness to wade into corners of the market that Mr. Buffett won’t touch, including the tech sector.

The investment shows the amount of rope Mr. Buffett is willing to give his protégés, as the legendary stock picker, who turns 86 years old in August, prepares Berkshire for a future without him at the helm. In an email Monday, Mr. Buffett didn’t say whether Mr. Combs or Mr. Weschler made the call. But he said they each make investment decisions without consulting him first.

The Apple position gives Berkshire a rare sizable stake in a technology company. Its first was Mr. Buffett’s $11 billion investment in International Business Machines Corp. Mr. Buffett made that investment in 2011 and has expanded it, most recently early this year. IBM shares have dropped roughly 20% since Berkshire disclosed its stake, as the company tries to turn itself around.

The IBM investment left many Berkshire shareholders, analysts and others scratching their heads. Mr. Buffett had long expressed caution when it comes to tech companies. In his 1996 annual letter to shareholders, he wrote that “many companies in high-tech businesses or embryonic industries will grow much faster in percentage terms…But I would rather be certain of a good result than hopeful of a great one.”

His opinion hadn’t changed much as of Berkshire’s annual shareholder meeting in 2012, where Mr. Buffett said he wouldn’t invest in Google Inc. or Apple. “I just don’t know how to value them,” he said.

That position changed sometime in the first quarter for Berkshire, when Mr. Combs or Mr. Weschler bought the stock. Apple’s shares were trading in the mid-90s for much of that time. They closed Monday up 3.7% at $93.88 but are still down nearly 11% this year.

The tech giant’s stock has been battered partly because...


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