September 17, 2020

On Snowflake, Apple and on Berkshire Hathaway


The Berkshire Hathaway thesis  I just heard on CNBC makes very little sense based upon the empirical evidence. As such, it is a silly narrative and an ill advised reason for suggesting a valuation reset. Snowflake is a minimal investment for Berkshire relative to its asset base. The promoter of the thesis suggests Warren's $AAPL (Apple) investment is further evidence that the company is no longer investing in traditional, non technology investments.

Memo to Berkshire Bull: the Apple investment was made three years ago - when some envisioned Apple as a value play (at less than 15x PE).  As to why he is not likely selling Apple now - though it is a large portion of the company's investment portfolio - probably has more to do with not wanting to pay taxes on $60 billion of unrealized gains than a desire to be invested in even greater amounts in technology. (If so, Buffett would probably have added to tech stocks in March 2020 when stocks were beaten down). He did not. 

Furthermore, Todd and Tedd have been given alot more money to manage at Berkshire in the last few years - yet there have been few individual new technology investments. Will Berkshire expand tech holdings in the future? Maybe, maybe not - but neither Apple nor Snowflake is evidence of such a future or fundamental change in Berkshire's investment strategy.


via twitter

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