Warren Buffett’s Berkshire Hathaway has sold 67% of its stake in Apple, reducing its holding by 615.56 million shares, and is now investing in Domino’s Pizza, a consumer brand whose stock has soared 7,000% since its IPO. The sale may be due to concerns about Apple’s high valuation and stalled physical product sales.
However, Buffett is attracted to Domino’s strong management team, shareholder-friendly capital-return programs, and successful turnaround story. Berkshire Hathaway purchased 1.28 million shares of Domino’s Pizza in the third quarter, valued at around $550 million.
Buffett is a value investor who looks for companies with solid management teams and attractive valuations. While Apple’s valuation is high, with a price-to-earnings ratio of 38, its physical product sales have stalled over the past two years. Domino’s, on the other hand, has increased its base annual payout for more than a decade and has repurchased its shares in all but a handful of quarters.
Buffett also values companies that can adapt to changing market conditions. Domino’s introduced its five-year plan, dubbed “Hungry for MORE,” which aims to improve operating efficiency and customer loyalty through menu offerings, tech-driven processes, and a renowned rewards program.
Despite the stock’s forward P/E ratio of 27, which may not be cheap, Berkshire Hathaway’s investment in Domino’s Pizza suggests that Buffett sees potential for long-term growth. The Oracle of Omaha is known for his selective buying strategy, focusing on companies with strong management teams and attractive valuations.
Source: https://finance.yahoo.com/news/billionaire-warren-buffett-sold-67-094100137.html