With this week's imprimatur from the legendary investor Warren Buffett, it should now be official: Apple, the world's largest company by market capitalization and a symbol of American technological innovation, is a "value" stock.
That may prove to be a decidedly mixed blessing.
Mr. Buffett is the world's most prominent and successful proponent of value investing — an approach that seeks stocks that are undervalued and sell for less than their "intrinsic value," as Benjamin Graham put it his 1949 classic "The Intelligent Investor." Mr. Buffett credits Mr. Graham with shaping his own approach to investing.
So value investors took notice when Mr. Buffett's holding company, Berkshire Hathaway, disclosed it had invested $1 billion in Apple stock during the last quarter.
"We've just looked at it again," said Bill Smead, who manages the Smead Value Fund, one of the most successful large-cap value mutual funds over the last five years, according to Morningstar. "Anybody that discounts the thinking at Berkshire Hathaway does so at their peril, in my opinion."