Berkshire Hathaway’s surprising new tech stake

As Warren Buffett gets closer to stepping down as CEO at the end of next month, he told shareholders he will be “going quiet,” but only “sort of.”

More on his Thanksgiving letter, which looks like it could become a substantial annual tradition, below.

First:

There was a notable surprise in Berkshire Hathaway’s end-of-Q3 equity portfolio snapshot, released after Friday’s closing bell.

Someone in Omaha purchased more than 17.8 million Class A shares of Google’s parent, Alphabet.

They are currently valued at $4.9 billion, making them the biggest Q3 addition in dollar terms.

The news sent the stock 3.5% higher in after-hours trading.

At this point, we don’t know who made the call.

Buffett has typically made purchases of this size, but it doesn’t feel like his kind of stock.

It is up 51.3% year-to-date, including a 37% climb in the third quarter.

Also, he has traditionally shied away from tech stocks. (He considers Apple a consumer products company.)

At the 2019 Berkshire meeting, Buffett and Charlie Munger lamented that they had “screwed up” by not buying Alphabet earlier because they “could see in our own operations how well that Google advertising was working. And we just sat there sucking our thumbs.”

On that day, the shares were going for around $59, and they gave no indication there were prepared to rectify their error.

Incoming CEO Greg Abel isn’t encumbered by that history, and Buffett has been handing over many of his duties to him.

Or it could be one or both of the portfolio managers, Ted Weschler and Todd Combs.

Stay tuned.

Alphabet was by far the biggest Q3 addition at $4.3 billion, based on the September 30 price, well ahead of a $1.2 billion increase for Chubb.

The biggest decreases, Apple and Bank of America, had been foreshadowed by hints in Berkshire’s 10-Q almost two weeks ago.

(The Verisign reduction was disclosed in early August.)

Berkshire’s Apple position was cut by almost 15%, or $10.6 billion, to around 238 million shares.

It’s down 74% since Berkshire began selling two years ago.

But Apple remains Berkshire’s largest equity position at $64.9 billion, which is 21% of the portfolio’s current value.

The Bank of America reduction was smaller, just 6.1%, or around $1.9 billion.

The remaining 238 million shares are currently valued at $29.9 billion, Berkshire’s third largest position, making up almost 10% of the portfolio’s current value.

It’s been cut by 43% since early last year.

A complete listing of Berkshire’s Q3 13F appears below. 

Many of the headlines on news stories about Warren Buffett’s Thanksgiving letter on Monday included this quotation: “I’m ‘going quiet.'”

But there was another phrase that followed that line near the top of the letter, getting its own paragraph: “Sort of.”