Strategic Shift for Berkshire, Long Cautious on Tech Stocks
Reflects Munger's Regret Over "Missing Google"
Berkshire Hathaway, led by Warren Buffett (95), known as the "Oracle of Omaha," has made significant purchases of Alphabet, the parent company of Google. Berkshire, which has long been cautious about investing in technology stocks, added Alphabet to its asset portfolio at a scale worth several trillion won, drawing intense attention from Wall Street.
Warren Buffett is being interviewed by Liz Claman on the Fox Business Network's "Countdown to the Closing Bell" broadcast on May 7, 2018, in Omaha, Nebraska. Photo by AP Yonhap News
According to Berkshire's quarterly report (13F) submitted to the U.S. Securities and Exchange Commission (SEC) on the 14th (local time), the company held Alphabet shares worth $4.33 billion (approximately 6.3 trillion won) as of the end of September.
Chairman Buffett has consistently adhered to the principles of value investing and has maintained a cautious stance toward major technology firms, with the exception of Apple. As a result, this purchase of Alphabet shares is being interpreted as a shift in internal investment strategy, and renewed attention is being paid to comments made by Vice Chairman Charlie Munger, Buffett's long-time partner, regarding a reassessment of Google.
At the 2017 shareholders' meeting, Vice Chairman Munger remarked that "the biggest mistake we made with technology companies was failing to properly evaluate Google." At the time, Chairman Buffett also expressed regret, saying, "We had the opportunity to review Google thoroughly, but we did not take advantage of it."
CNBC analyzed that this purchase of Alphabet shares was likely led by Berkshire portfolio managers Todd Combs or Ted Weschler. Both individuals were instrumental in expanding Berkshire's technology investments by leading the acquisition of Amazon shares in 2019.
Berkshire also reported that it reduced its Apple holdings by about 15% in the third quarter. However, even after the sale, the value of its Apple shares remains at $60.7 billion (about 88 trillion won), making it the largest holding in Berkshire's listed stock portfolio.
At the shareholders' meeting in May, Chairman Buffett officially announced his plan to step down as CEO by the end of 2025. After his retirement, Vice Chairman Greg Abel, who has been named as his successor, will take over management.
Buffett: "Will Maintain Shares Until Successor Is Settled"
In a recent message to shareholders, Chairman Buffett indicated that he intends to retain his Berkshire Hathaway shares until confidence in the next management team is firmly established. This is seen as a signal that, even after stepping down as CEO, he intends to maintain a certain level of influence as the owner.
As of the second quarter of this year, Chairman Buffett held approximately $149 billion (about 217 trillion won) worth of Berkshire shares, most of which are Class A shares. He remains the company's largest shareholder. Buffett also stated that he will continue to send annual letters to shareholders around Thanksgiving, sharing the company's direction and his thoughts.
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