Apple has an enormous amount of cash sitting around — $267 billion, at last count — which perpetually prompts armchair analysts to suggest ways the company should spend its money — Netflix is doable for $140 billion. Tesla only costs $50 billion!
That’s dumb, says Warren Buffett, the world’s best-known investor. Apple should spend its cash buying Apple shares — just like Warren Buffett.
Not a coincidence: That’s Apple’s plan.
The Berkshire Hathaway CEO, who makes a point of saying he doesn’t understand technology, now owns a large slug of Apple stock. And he says he likes Apple’s plan, announced last week, to spend $100 billion buying its own shares.
It’s a better idea, he says, than spending that money on other companies, which have the disadvantage of not being Apple.
“They’re not going to find $50 billion or $100 billion acquisitions that they can make at remotely a sensible price that really become additive to them,” Buffett said today at Berkshire’s annual meeting/fanfest.
Then again, he said, “They may find it. Who knows.”
Buffett’s comments came a day after he announced that Berkshire had acquired another 75 million shares of Apple, which caused Apple shares — and his five percent stake in the company — to increase by 4 percent in a day. Which is nice work if you can get it.
Below is a clip of Buffett’s comments, unless you’re reading this on a platform that doesn’t allow this type of embedded clip.
This article originally appeared on Recode.net.