Berkshire Hathaway Invests $4.3 Billion in Alphabet While Reducing Apple Stake
Warren Buffett’s Berkshire Hathaway has made a significant $4.3 billion investment in Alphabet, parent company of Google, while continuing to sell off its Apple shares. This portfolio adjustment comes as Buffett prepares to step down after 60 years as CEO.
Key Takeaways
- Berkshire purchased $4.3 billion stake in Alphabet (Google)
- Apple holdings reduced to 238.2 million shares from 280 million
- Apple remains Berkshire’s largest stock investment at $60.7 billion
- Alphabet now ranks as Berkshire’s tenth-largest US stock holding
A regulatory filing with the US Securities and Exchange Commission revealed the company has sold nearly three-quarters of the more than 900 million Apple shares it once held. Despite the reduction, Apple remains the cornerstone of Berkshire’s $283.2 billion equity portfolio.
It remains unclear whether Buffett, his portfolio managers Todd Combs and Ted Weschler, or CEO-designate Greg Abel made the specific Alphabet purchase decision.
Why Berkshire Finally Invested in Google
The Alphabet investment marks a notable shift for Berkshire, given Buffett’s historical aversion to technology companies and his strict value-investing principles.
This move comes years after Buffett and his late partner Charlie Munger publicly expressed regret for not investing in Google earlier. At Berkshire’s 2019 annual meeting, Buffett acknowledged Google’s advertising model shared similarities with what made Berkshire’s Geico car insurance unit successful.
“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.
Buffett’s Final Moves Before Stepping Down
Warren Buffett announced in May that he would step down as CEO by year-end, marking the end of his six-decade leadership. He has been accumulating cash reserves while preparing to hand over the $1.1 trillion conglomerate to Greg Abel, currently vice chairman, effective January 1.
Investors and analysts note that the Nebraska-based company has shown increased caution about market valuations recently. Berkshire has gone more than a year without buying back its own stock and nearly a decade without a major acquisition.
