June 25, 2024


Warren Buffett’s Berkshire Hathaway purchased a $4.1bn stake in chipmaker Taiwan Semiconductor Manufacturing in the third quarter, vaulting a third tech company into the sprawling industrial conglomerate’s top stock holdings.

The purchase of 60mn US-listed shares of TSMC, disclosed with US securities regulators on Monday, marked Berkshire’s largest new stock investment during the three months to September.

It is also the latest shift by the conglomerate, which spans the Geico insurer, BNSF railroad and Dairy Queen ice cream purveyor, into blue-chip technology companies.

Buffett has in recent years shown a greater willingness to invest in tech, with the Berkshire stock portfolio now counting Apple, computer and printer maker HP and cloud database company Snowflake among its holdings.

The well-known value investor has had a sometimes fractious relationship with the tech industry. He avoided large investments in the sector for years, warning shareholders that he either did not understand the operations or was not best equipped to value the businesses of many high-tech companies.

But that has changed as the industry has matured and Buffett’s understanding of the sector’s place in the global economy has evolved. Berkshire now holds a $126.5bn stake in Apple — its largest investment in a publicly traded stock.

Buffett, who has said he regretted passing on earlier investments in Google owner Alphabet and Amazon, has had his fair shares of misses. The company invested and then sold out of its stake in IBM — he conceded in 2017 that Big Blue was facing intense competition from rivals. Berkshire also briefly held a stake in Intel, buying shares in 2011 before selling out the next year.

Jim Shanahan, an analyst at Edward Jones, estimated that shares of tech and communications businesses now made up roughly half of Berkshire’s stock portfolio, which he said offered a balance given the conglomerate’s “portfolio companies are more old economy”.

It was unclear whether Buffett directed the investment in TSMC himself or if it was made by Todd Combs or Ted Weschler, two lieutenants who help oversee the company’s $306bn stock portfolio. Berkshire did not respond to a request for comment.

The Taiwanese company is the biggest manufacturer of the world’s most advanced processor chips, which are used in smartphones, computers and military and space equipment. TSMC, which has deep partnerships with US chip designers such as Nvidia and a large manufacturing presence in China, is at the centre of a battle between Beijing and Washington for technological supremacy.

The tweaks to Berkshire’s investment portfolio were somewhat small in the third quarter. The company also bought a $13mn stake in investment bank Jefferies and purchased $300mn worth of building materials maker Louisiana-Pacific. It increased its investments in oil majors Chevron and Occidental and media company Paramount Global.

The company cut its holdings of gaming group Activision Blizzard, banks US Bancorp and BNY Mellon, and carmaker General Motors during the third quarter.

The relatively small adjustments follow a busy spurt of dealmaking by Berkshire this year, including the $11.6bn takeover of insurance rival Alleghany. Analysts expect the payment for that deal, which closed in October, will reduce the conglomerate’s $109bn cash pile.

Regulatory filings from large money managers disclosed on Monday showed others were also shifting their tech holdings, as a sell-off this year weighs heavily on the industry.

Appaloosa and Coatue Management reduced their stakes in Facebook parent Meta, while Glenview Capital Management exited its stake in the social media company.

Additional reporting by Edward White in Seoul


Source link