Could it be the start of a new era for Berkshire Hathaway before Warren Buffett even vacates the CEO chair?
The famed investor’s company purchased 17.8 million shares of Alphabet last quarter, a position worth $4.3 billion as of September 30, a regulatory filing revealed on Friday.
Alphabet — the parent company of Google, YouTube, Waymo — is a technology titan with a $3.4 trillion market capitalization. The search-and-advertising giant has been one of the “hyperscalers” fueling the stock market’s AI boom; its stock has surged 46% this year.
Buffett, 95, has eschewed tech companies for most of his career, preferring to stay within his famous “circle of competence” and invest in industries he deeply understands, such as insurance, banks, and railroads.
He famously made an exception for Apple, which remains among Berkshire’s biggest portfolio holdings despite Buffett paring the company’s stake in the iPhone maker in recent quarters.
Berkshire continued that trend last quarter, reducing its Apple position by 15% to 238 million shares, worth about $61 billion at September’s close. It also pared its key Bank of America stake by 6%.
Buffett has lamented not investing in Google several times over the years, saying “we blew it” on one occasion. It may have been one of his two investment managers, Todd Combs and Ted Weschler, who established the new position.
The billionaire is set to step down as CEO before the new year. He has spent the past six decades transforming Berkshire from a failing textile mill into a world-beating conglomerate with a $1 trillion market value. Under his watch, it has acquired scores of subsidiaries including Geico and Dairy Queen, and built huge stakes in household names such as Coca-Cola and American Express.
Berkshire’s third-quarter earnings foreshadowed its disposals. They showed that Buffett and his team spent $6.4 billion on stocks but sold $12.5 billion worth, making them net sellers for a 12th straight quarter. Its latest portfolio update shows Alphabet made up the lion’s share of its purchases lat quarter.
Buffett, perhaps the world’s foremost bargain hunter, has struggled to find deals in recent years as stocks have surged to record levels, fierce competition has driven up the price of acquisitions, and buybacks have grown unattractive with Berkshire stock near all-time highs.
Berkshire’s coffers have swelled as a result. After subtracting Treasury payables, its cash pile rose to a record $358 billion last quarter. One of the most vital tasks for his successor, Greg Abel, will be putting that war chest to work.
Despite his challenges, Buffett struck an optimistic tone in his Thanksgiving letter to shareholders this week, saying that he still spots the occasional opportunity, and he expects Berkshire to fare well in the years ahead.
