Warren Buffett's recent investment in IBM proves he's still a shrewd investor, hedge fund manager Whitney Tilson told the "Fast Money" team Monday.
“It's remarkable to see an 81-year-old guy continually expanding his circle of competence,” he said. “He’s putting large chunks of money to work in very nimble and clever ways.”
Warren Buffett revealed his $10.7 billion purchase ofIBM common stock earlier Monday on CNBC.
While Tilson was initially surprised by the move, he said after looking at IBM , it now makes sense.
“It’s a globally diversified business that is called a tech company,” Tilson added, “but it really probably has the lowest level of technology risk you can think of in the tech sector in the sense that only eight percent of their net earning are from hardware. “
Plus, he said, IBM has been an incredibly stable cash-producing business and a solid performer for the past two decades.
Tilson said by investing in IBM, Buffett wasn’t looking for a cheap stock that would double his money quickly.
“Rather, [Buffett’s] putting a huge amount of money to work in something that is going to crank out very nice returns for a long period of time with a high degree of certainty,” he said. “That’s what he’s looking for when he’s absolutely drowning in cash. He’s got $64 billion in cash and bonds earning nothing right now.”
