Berkshire Hathaway Buys Teva and Sells IBM

Billionaire investor Warren Buffett has bought a stake in a drug maker while selling a stake in IBM. Buffett’s company Berkshire Hathaway recently bought of stake of $358 million in Israel-based Teva Pharmaceutical a maker of generic drugs. In the U.S., Teva’s drugs filled approximately one in every six generic prescriptions. Teva stock surged 7% in afterhours trading following the news.

Buffet’s stake, which was reported by the company in a filing Wednesday with the SEC, is part of the investor’s attempt to improve the healthcare industry. In January, Berkshire, JPMorgan Chase and Amazon announced the three would form a company that would give their workers and families in the U.S. better health insurance.

Buffett at that time, said that the ballooning healthcare costs act similar to a hungry tapeworm on the economy in the U.S.

Spending on health continues to be a growing expense for people and businesses. Spending on the national health, which includes spending by state and federal governments, people and the private sector, has increased from only 5% of the economy during 1960 to over 18% in 2016.

At the same time, Berkshire Hathaway liquidated nearly its entire stake in IBM during the past three months. The company sold over 35 million shares it owned and is currently holding only approximately 2 million shares of Big Blue.

This disclosure of Berkshire Hathaway selling IBM stock did not appear to have an effect on IBM’s stock, which in afterhours trading moved slightly higher. The reason could be due to investors already knowing that Buffett was not happy with IBM stock. Last May, the billionaire investor said he had liquidated nearly one third of his stake in IBM.

At that time, Buffett said that he no longer valued IBM in the same way he did more than six years ago at the time he started purchasing it. He added that if you looked back at what IBM has been projecting and the way in which they thought their business would be developing it is easy to see they have come up against very tough competition.

Berkshire Hathaway also sold 10 million General Motors’ shares and over 6 million Wells Fargo shares. At the same time, the investment company purchased over 31 million shares of tech giant Apple, Inc.

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