Warren Buffett's Berkshire Hathaway Buys Amazon

Warren Buffett revealed in an interview with CNBC that one of his portfolio managers has bought a stake in Amazon for Berkshire Hathaway

David Brenchley 3 May, 2019 | 3:00PM
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Warren Buffett, Berkshire Hathaway, Amazon Prime, Technology stocks, stock market, Amazon share price, Scottish Mortgage, investment trusts

Warren Buffett’s Berkshire Hathaway (BRK.B) has started buying shares in e-commerce behemoth Amazon (AMZN), the famed investor told CNBC on Thursday, ahead of Berkshire’s annual shareholder meeting this weekend.

Buffett’s value-biased investment approach has seen him previously shun large parts of the technology sector, an industry he’s claimed not to understand. But in recent years he has started to dip his toes in the water – and has previously admitted not getting in earlier has been a mistake.

In 2016, he began initiating a position in smartphone maker Apple (AAPL), which as of December 31, 2018 was Berkshire’s largest investment and two times larger than its second biggest position, Bank of America (BAC). His only previous foray into the tech sector was an investment in IBM (IBM), which was sold in 2018.

But Buffett admitted one of Berkshire’s portfolio managers – either Todd Coombs or Ted Weschler, who each manage equity portfolios worth more than $13 billion – had “bought some Amazon” recently and that the holding will show up in Berkshire’s quarterly report to the US Securities and Exchange Commission later in May.

Buffett said he’d long “been a fan” of Amazon and added he’d “been an idiot for not buying” shares sooner. “It’s far surpassed anything I would have dreamt could have been done,” he explained.

“If I really felt it could have been done, I should have bought it. I had no idea that it had the potential. I blew it.”

Amazon shares were up 2.50% in early trading on Friday at to $1,948 and closing in on September’s record high $2,040, having been trading at a 22-month low of $1,377 at Christmas.

It was announced in April that both Berkshire and Amazon were teaming up with bank JPMorgan Chase (JPM) to set up an independent company aimed at providing healthcare services to their employees at a lower cost. The venture has been touted as a test ground for Amazon’s long-awaited move into the healthcare sector.

With Berkshire’s shareholder meeting this weekend, Morningstar senior analyst Gregg Warren explains whether he thinks shares are undervalued and whether its moat looks stable.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Amazon.com Inc180.83 USD-2.99Rating
Apple Inc218.54 USD-2.88Rating
Bank of America Corp42.19 USD-0.52Rating
Berkshire Hathaway Inc Class A650,080.00 USD-0.23Rating
Berkshire Hathaway Inc Class B432.80 USD-0.28Rating
International Business Machines Corp184.02 USD-0.04Rating
JPMorgan Chase & Co208.59 USD-0.83Rating

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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