Warren Buffet. Photo by Scott Eells/Bloomberg
The extensive equities portfolio of Warren Buffett‘s Berkshire Hathaway Inc. has experienced a significant reorganization, with a $4.9 billion investment in Alphabet Inc. and a decrease in its long-standing holdings in the technology giant Apple Inc. and the financial powerhouse Bank of America Corp.
The extensive equities portfolio of Warren Buffett‘s Berkshire Hathaway Inc. has experienced a significant reorganization, with a $4.9 billion investment in Alphabet Inc. and a decrease in its long-standing holdings in the technology giant Apple Inc. and the financial powerhouse Bank of America Corp.
The actions, disclosed in a regulatory filing on Friday, may mark the beginning of a new era for the company. The renowned 95-year-old investor is scheduled to resign as CEO at year’s end.
A Major Tech Bet on Google’s Parent
Berkshire purchased 17.9 million shares in Alphabet, the parent firm of YouTube and Google, during the third quarter. As of the market closing, this new investment was estimated to be worth $4.9 billion, or 0.31% of Alphabet’s outstanding shares.
Buffett has always avoided digital businesses. He favors sectors within his well-known “circle of competence” like banking and insurance. So, his choice to make a sizable investment in Alphabet is remarkable. In prolonged trading after the revelation, Alphabet’s stock increased 1.7% to $281. Ted Weschler or Todd Combs, one of Berkshire’s two investment managers, is thought to have created the new role.
Pairings in Apple and Bank of America
Berkshire sold $6.1 billion in stock over that period, making it a net seller despite its buying of Alphabet.
Two of the conglomerate’s biggest holdings were drastically reduced:
- Apple Inc.: Berkshire reduced its ownership of the company by 15% to 238 million shares. As of September 30, these shares were still worth a substantial $60.7 billion. The iPhone manufacturer still makes up nearly 25% of Berkshire’s equity portfolio despite the cut.
- Bank of America Corp.: The corporation retained a 7.7% holding in Bank of America after selling 37.2 million shares of the company. The bank continues to be Berkshire’s third-largest asset.
Deploying the Cash Pile
Buffett has been aggressively looking for ways to use some of Berkshire’s enormous cash pile. It had grown to a record $382 billion at the end of the quarter. He is getting ready to leave his position as CEO after six decades.
In addition to the Alphabet investment, recent actions consist of:
- Acquisitions: Reaching a $9.7 billion agreement to buying the petrochemical division of Occidental Petroleum Corp.
- New Stakes: Increasing the value of that holding to $8.8 billion by purchasing a $1.6 billion interest in UnitedHealth Group Inc. and 4.3 million shares of insurer Chubb Ltd.
- Exits: Giving up all of its stake in US house builder D.R. Horton Inc. while keeping up its acquisition of Lennar Corp.
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