By Sam Forgione
NEW YORK (Reuters) - Billionaire investor Warren Buffett told CNBC on Monday his conglomerate Berkshire Hathaway (NYSE:BRKa) Inc had more than doubled its stake in Apple Inc. since the end of 2016, making it one of Berkshire's biggest equity holdings, and that U.S. stocks overall were not in "bubble territory."
"Apple strikes me as having quite a sticky product and an enormously useful product to people that use it, not that I do," said Buffett, chairman and chief executive of Berkshire Hathaway. He said Berkshire's Apple stake, currently at about 133 million shares, was worth about $18 billion based on Friday's closing price and amounted to Berkshire's second-biggest holding.
At the end of Dec. 31, Berkshire had held 61.2 million shares for a total of $6.75 billion, according to regulatory filings. Buffett said his ambitious move into Apple shares (NASDAQ:AAPL) was piggybacking on the initial investment made by Buffett's deputy investment managers, Todd Combs and Ted Weschler.
Apple Chief Executive Tim Cook had done a "terrific job," Buffett said, but added he had not bought shares since the company's earnings report.
Buffett, 86, who told the cable television network that Berkshire had spent about $20 billion on stocks since just before the Nov. 8 U.S. election, also said the U.S. stock market was cheap with interest rates at current levels.
Benchmark 10-year U.S. Treasury notes last yielded 2.333 percent in morning U.S. trading.
Buffett said it was extremely difficult to attempt to find a floor in stock prices and that he did not know what would happen in the near term in the equity market.
He said U.S. shares could conceivably "go down 20 percent tomorrow."
Buffett said Berkshire's positions in airlines remained unchanged. He said pricing shares of airlines has historically been a "very tough game" and he had never met the chief executives of the four airlines in which Berkshire holds stakes.
Berkshire reported a $9.3 billion airline stake at the end of Dec. 31, according to Securities and Exchange Commission filings, with investments topping $2.1 billion in each of American Airlines Group Inc, Delta Air Lines Inc (NYSE:DAL), Southwest Airlines Co and United Continental Holdings Inc.
Buffett, who was a vocal supporter of Democratic presidential candidate Hillary Clinton, said he would judge U.S. President Donald Trump based on how safe the country is in four years. He said he would also judge the Republican president according to how the U.S. economy performs overall and how wide participation in a better economy extends.
Despite his disagreement with some of Trump's policies, Buffett said the U.S. economy would be better off in four years under any president. He said that U.S. Secretary of State Rex Tillerson made "a lot of sense."
On Kraft Heinz's snubbed bid for Unilever (LON:ULVR), Buffett said it was never intended to be a hostile offer and that there was not a "backup deal." Berkshire is a key investor in Kraft Heinz.
"Will there be another deal at Kraft Heinz some day? My guess is yes, but who knows when, I mean, there’s no backup deal, and again, it would have to be friendly and frankly, the prices in that field make it very, very, very tough to make an intelligent deal."
Asked about Berkshire's $86 billion cash pile, he said the conglomerate was "always looking" for acquisitions but that there was "nothing close."
Buffett said it was enormously important for the U.S. economy to have 30-year government-guaranteed mortgages, but that mortgage giants Fannie Mae and Freddie Mac were not necessary in order to accomplish that.
On 30-year U.S. Treasury bonds, Buffett said: "It absolutely baffles me who buys the 30-year bond" and that doing so was not sensible at current yields. U.S. 30-year government bonds last yielded 2.964 percent.
Buffett reiterated that Americans are better off buying plain-vanilla index funds than committing money to active managers. He added that the hedge fund industry's standard fee structure of 2 percent of assets and 20 percent of investment gains "borders on obscene."
In an annual letter to shareholders on Saturday, Buffett slammed fee-hungry investment managers: "When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients."
Buffett praised Amazon (NASDAQ:AMZN) Chief Executive Jeff Bezos as possibly the best manager he had ever seen and said Berkshire "missed big time" by not purchasing Amazon shares early on.
He said the U.S. economy was doing "terrific," even at just 2 percent growth per year.