Berkshire Hathaway has made headlines with a substantial new investment in Alphabet, amounting to $4.3 billion, while simultaneously scaling back its longstanding position in Apple. This marks a significant moment as it comes ahead of Warren Buffett’s anticipated departure after six decades at the helm of the conglomerate.
In a recent filing to the U.S. Securities and Exchange Commission, it was revealed that as of September 30, Berkshire owned 17.85 million shares of Alphabet. This investment positions Alphabet as the tenth-largest U.S. holding within Berkshire’s portfolio. The company’s quarterly report also disclosed a reduction in its Apple holdings, which fell from 280 million shares to 238.2 million—a decline of nearly three-quarters from its previous total of over 900 million shares. Despite this decrease, Apple remains Berkshire’s largest stock position, valued at $60.7 billion.
The significance of Alphabet’s inclusion comes as a departure from Buffett’s long-established strategy of favoring value-oriented stocks. Historically, he has shown hesitance toward technology companies, categorizing Apple’s products more as consumer goods than pure tech. However, this new investment indicates a potential shift in Buffett’s investment philosophy.
During Berkshire’s 2019 shareholder meeting, Buffett reflected on past missed opportunities, specifically regarding Google, acknowledging his regret in not investing sooner. He noted parallels between Google’s advertising model and the successful strategies behind Berkshire’s own Geico insurance business, a sentiment echoed by the late Charlie Munger.
Alphabet’s stock experienced a 1.7% increase in after-hours trading, a typical response following news of Berkshire’s new stakes, which generally engenders confidence among investors.
In addition to new investments, the quarterly filing also reported that Berkshire has been a net seller of stocks for the twelfth consecutive quarter, with purchases totaling $6.4 billion against sales of $12.5 billion between July and September. This has contributed to a record cash reserve of $381.7 billion. Analysts believe a significant portion of the sales is associated with the continued reduction in Berkshire’s Apple shares.
Moreover, Berkshire has further reduced its stake in Bank of America by 6%, continuing a selling trend initiated in the previous year. Bank of America remains the conglomerate’s third-largest stock position. The report confirmed the complete exit from homebuilder DR Horton, while enhancing stakes in companies such as Chubb and Domino’s Pizza.
As Buffett gears up to transition leadership of Berkshire’s $1.1 trillion enterprise to CEO-designate Greg Abel on January 1, analysts have remarked on the cautious valuation approach the company has taken. Berkshire has not engaged in major acquisitions for almost a decade and has refrained from stock buybacks for over a year. Beyond its extensive market investments, Berkshire oversees approximately 200 businesses across various sectors, including railroads, energy, manufacturing, and prominent retail brands.
