Berkshire Hathaway Invests $4.3 Billion in Alphabet, Cuts Apple Stake

Berkshire Hathaway has announced a major investment in Alphabet Inc., the parent company of Google, amounting to $4.3 billion. This move marks a significant shift in the investment strategy of the conglomerate, particularly as it scales back its long-standing investment in Apple Inc. The announcement comes as Warren Buffett prepares to step down as chief executive after over six decades leading the company.

In a disclosure filed with the United States Securities and Exchange Commission, Berkshire Hathaway reported owning 17.85 million shares of Alphabet as of 30 September. This investment has positioned Alphabet as the tenth-largest holding in Berkshire's portfolio. The firm's decision to invest in Alphabet is notable given Buffett's historical preference for value-oriented investments and his previous hesitations about technology firms.

During the same quarter, Berkshire reduced its stake in Apple from 280 million shares to 238.2 million shares, according to a report by Reuters. Over the years, the company has divested nearly three-quarters of its initial investment of over 900 million shares in Apple. Despite this reduction, Apple remains the largest holding in Berkshire's portfolio, valued at approximately $60.7 billion.

The filing provided a comprehensive overview of Berkshire's equity positions listed in the US, which collectively account for a significant portion of its total stock portfolio, estimated at $283.2 billion. Warren Buffett has previously characterised Apple not just as a technology company, but more as a consumer products business, highlighting its broad appeal and strong brand loyalty.

While it remains unclear who specifically made the decision to invest in Alphabet, it is known that Buffett typically oversees larger investment transactions. Buffett and his long-time partner, the late Charlie Munger, acknowledged in 2019 that they had missed earlier opportunities to invest in Google, with Buffett noting the similarities between Google’s advertising model and Berkshire’s own Geico insurance business. "We screwed up," Munger remarked, to which Buffett responded, "He’s saying we blew it."

Following the announcement, Alphabet's shares experienced a 1.7% increase in after-hours trading, a response that often follows Berkshire’s announcements of new investments, as many investors view these as signals of confidence.

In addition to the investment in Alphabet, the quarterly update revealed that Berkshire Hathaway had also made adjustments to its holdings in other companies. Between July and September, the firm purchased $6.4 billion worth of stocks while selling off $12.5 billion, marking the twelfth consecutive quarter in which it has been a net seller. The company's cash reserves have now reached a record high of $381.7 billion.

Berkshire Hathaway has also reduced its stake in Bank of America by 6%, continuing a trend of divestment that began in the third quarter of the previous year. Despite these sales, Bank of America remains Berkshire's third-largest stock position. Furthermore, the company has exited its investment in homebuilder DR Horton and has increased its stakes in other businesses, including Chubb and Domino’s Pizza.

As Buffett prepares to pass the reins of Berkshire’s extensive $1.1 trillion empire to his successor, Greg Abel, on 1 January, analysts note that the company has adopted a cautious approach to valuations, refraining from making significant acquisitions for nearly a decade and not repurchasing its own shares for over a year. Beyond its stock market investments, Berkshire Hathaway controls around 200 subsidiary companies across various sectors, including energy, manufacturing, and well-known retail brands such as Dairy Queen and See’s Candies.