Warren Buffett’s Berkshire Hathaway has announced a significant $4.3 billion investment in Alphabet, Google’s parent company. This marks the last time Berkshire will detail its stock holdings before Buffett ends his 60-year run as chief executive officer. The company’s filing on Friday with the U.S. Securities and Exchange Commission showed Berkshire owned 17.85 million Alphabet shares as of September 30.
This move comes as a surprise to many, given Buffett’s traditional “value investing” approach and his usual hesitation with technology companies. Interestingly, Buffett has always considered Apple, which makes the iPhone, more of a consumer products company. At Berkshire’s 2019 annual meeting, Buffett and the late Charlie Munger, his longtime partner, expressed regret for not investing in Google sooner. Buffett noted Google’s advertising model had similarities to what worked for Berkshire’s Geico car insurance business, with Munger bluntly stating, “We screwed up.”
While Berkshire now holds Alphabet as its 10th-largest U.S. stock, it also further reduced its Apple stake. Berkshire sold off more of its Apple shares, dropping its holdings from 280 million to 238.2 million in the third quarter. Despite these sales, Apple remains Berkshire’s largest stock holding, valued at $60.7 billion. It’s unclear whether Buffett, his portfolio managers Todd Combs and Ted Weschler, or CEO-designate Greg Abel made these specific trades, though Buffett typically handles larger investments.
Between July and September, Berkshire bought $6.4 billion in stocks but sold $12.5 billion, making this the twelfth straight quarter it was a net seller. This activity saw Berkshire’s cash reserves grow to a record $381.7 billion. Apple likely accounted for three-quarters or more of these sales.
Berkshire also sold 6% of its Bank of America shares, though the bank remains its third-largest stock holding. The company shed its entire stake in homebuilder DR Horton while buying more shares in companies such as insurer Chubb and Domino’s Pizza. Buffett is allowing cash to swell as he prepares to hand over the $1.1 trillion conglomerate to Abel on January 1.
