The revered Oracle of Omaha has been changing his tune in regards to tech stocks. Despite the fact that he has historically shunned these companies, citing his lack of expertise in the area, Warren Buffett has recently made a number of moves in the tech space, albeit with major, well-known companies that are relatively low risk.
Amazon (NASDAQ: AMZN) is one of them, and while Buffett has talked about Jeff Bezos and the company in the past, recent filing has revealed Berkshire Hathaway has recently made a $904 million stake in the e-commerce giant.
For the most part, Buffett’s strategy has focused on investing in undervalued blue-chip stocks in companies like Bank of America or Coca-Cola.
However, Berkshire Hathaway has shifted its philosophy recently, having purchased shares of other tech companies like Apple in the past. This particular investment decision, however, appears to have first been the idea of someone else other than Buffett, likely one of Berkshire’s other portfolio managers.
“One of the fellows in the office that manage money … bought some Amazon, so it will show up in the 13F,” said Buffett earlier in May when he first confirmed the company was buying shares. “Yeah, I’ve been a fan, and I’ve been an idiot for not buying” Amazon shares, “But I want you to know it’s no personality changes taking place.”
While markets knew that Berkshire was buying some shares of Amazon for the past couple of weeks, they didn’t know exactly how big of an investment it was going to be. While $904 million isn’t a massive investment for a company of Berkshire’s size, it’s a significant enough starting point should they wish to expand their investment going forward.
Berkshire has also been sitting on a record amount of cash as Buffett has been struggling to find good deals in the current market climate where almost everyone is willing to pay some sort of a premium.
Many analysts have regarded Amazon as a stock that’s poised to explode in the coming years. Earlier in April, analyst Brent Thill wrote in a note that he saw the company potentially moving up into the $3,000 price range backed by growth in it’s advertising and Amazon Web Service segments.
Shares of Amazon jumped up 3 percent earlier in May when Buffett made his statements. Today, the company saw a 1.7 gain as the markets found out exactly how much money the oracle of Omaha invested in the e-commerce giant.
Amazon Company Profile
Amazon is among the world’s highest-grossing online retailers, with $233 billion in net sales and $408 billion in estimated global gross merchandise volume (GMV) in 2018.
Online product and digital media content sales accounted for 53% of net revenue in 2018, followed by commissions, related fulfillment and shipping fees, and other third-party seller services (18%), Amazon Web Services’ cloud compute, storage, database, and other offerings (11%), Prime membership fees and other subscription-based services (6%), product sales at Whole Foods and other physical store retail formats (7%), and advertising services and cobranded credit cards (4%). International segments constituted 32% of Amazon’s non-AWS sales in 2018, led by Germany, the United Kingdom, and Japan. – Warrior Trading News