Berkshire Hathaway revealed on Friday it had purchased a $4.3 billion stake in Alphabet while continuing to reduce its investment in Apple. The company is detailing its equity portfolio for the last time before Warren Buffett ends his 60-year run as chief executive officer.
A regulatory filing before the US Securities and Exchange Commission said the company had now cut its Apple stake to 238.2 million shares from 280 million in the third quarter — selling nearly three-quarters of the more than 900 million shares it once held. The $60.7 billion investment in Apple however remains the largest stock holding in the conglomerate’s $283.2 billion equity portfolio.
It was not immediately clear whether Buffett, his portfolio managers Todd Combs and Ted Weschler, or CEO-designate Greg Abel made the specific purchases, though Buffett normally makes larger investments.
Why Google?
The investment in Alphabet makes the Google parent company Berkshire’s tenth-largest US stock holding. But it is somewhat surprising given the typical value-investing style and aversion to technology companies shown by Buffett over the years. At Berkshire’s annual shareholder meeting in 2019, Buffett and late Vice Chairman Charlie Munger lamented not investing in Google sooner.Buffett said Google’s advertising model bore similarities to what was working for Berkshire’s Geico car insurance unit.
“We screwed up,” Munger had said.
“He’s saying we blew it,” Buffett responded.
“I had seen the product work and I knew the kind of margins…I mean I always said it’s great to find something that costs a penny and sells for a dollar…This doesn’t cost anything. And it’s very useful. I mean if you’re looking up Auto Insurance on Geico…you know you’ve got an interest in auto insurance. It’s a very directed way of talking to people. So the real question in my mind…I’d seen all the vista before…and what I didn’t know was whether there’d be more entrance. I didn’t know enough about technology to know whether this really was the one that would stop the competitive race and all that…but…I should have done Google too,” he told an interviewer a few years ago.
Warren Buffett bids adieu
Warren Buffett announced in May that he would step down as CEO by the end of this year. He has since let cash swell as he prepares to turn his $1.1 trillion conglomerate over to Abel (now a vice chairman) on January 1. Investors and analysts opine that the Nebraska-based company has been cautious about valuations in recent months — having gone more than a year since buying back its own stock and nearly a decade without a giant acquisition.
(With inputs from agencies)
