Warren Buffett Explains Why He Dumped A Third Of His IBM Stock

Billionaire investor Warren Buffett sold part of his stake in International Business Machines Corp. IBM, a stock he started buying in 2011 at an average cost per share of around $170.40.

Buffett Was Wrong?

Shares of IBM were trading lower by more than 3 percent early Friday morning after Buffett confirmed with CNBC's Becky Quick he sold off around one-third of his 81 million share stake in IBM. Related Links: Is Buffett Shopping Around For A 12-Digit Acquisition? What Donald Trump And Warren Buffett Have In Common _______ Image Credit: By Clockready - Own work, CC BY-SA 3.0, via Wikimedia Commons

Buffett's stake in "Big Blue" represented a multi-billion dollar loss throughout 2015 and 2016 and was briefly positive in 2017. He told CNBC last year patience is key to his investments, and he only buys stocks in companies that have a five- to 10-year game-plan.

But Buffett also told CNBC last year that he "could be wrong," and if he is, he can "accept that."

He explained he doesn't value IBM's stock and business the same way he did six years ago when he started buying. As such, he "revalued it somewhat" and actually sold a" reasonable amount" of stock for a profit at above $180 per share.

Buffett admitted that his investment thesis in IBM hasn't played out as he and IBM's own management had expected. He expanded that IBM remains a "big strong company," but over the past few years, it began facing "some pretty tough competitors."

But Buffett still holds more than 50 million shares of IBM and isn't a seller of the stock below the $160 per share mark.

At last check in Friday's pre-market session, shares of IBM were down 3.18 percent at $154.07.