Warren Buffett's Berkshire Hathaway invests in Amazon for the first time

by Ben Pena May 5, 2019, 1:13
Warren Buffett's Berkshire Hathaway invests in Amazon for the first time

Amazon was trading sharply higher in pre-market trading on May 3.

The figures were released hours before Berkshire Hathaway's marathon annual shareholder meeting kicked off in Omaha, Nebraska on Saturday. Berkshire Hathaway is known for its value investments.

These results illustrate what Buffett has called the "wild and capricious" and, in his view, meaningless swings caused by an accounting rule requiring the reporting of unrealized stock gains with earnings, regardless of Berkshire's plans to sell.

The Berkshire Hathaway chairman and chief executive officer said "one of the fellows in the office that manage money" made the purchases, a reference to investment managers Todd Combs and Ted Weschler.

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"Yeah, I've been a fan, and I've been an idiot for not buying", Buffett told CNBC.

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Berkshire's embrace of Amazon underlines how the company's longstanding aversion to the technology sector - a sector Buffett has claimed was outside his circle of competence - is disappearing. "I hope [Buffett] lives forever, but that's probably not a good bet". After taking losses, Buffett had sold almost all the IBM stock by previous year. That was more than the $1.3 billion that Berkshire, which historically has preferred using its cash on equities or acquisitions, spent all of past year after relaxing its policy on buybacks. The company's annual retreat should answer these questions for investors. The company also this week pledged $10 billion to help finance Occidental Petroleum's bid to beat out rival Chevron take over Anadarko Petroleum.

"I'm a card-carrying capitalist", Buffett said. While Berkshire Hathaway's stake in Amazon might not be a game changer, it could decrease some of the valuation concerns. He explains, "Mr. Buffett has commented pretty negatively on the airline space over the years, and actually speaks a lot about his poor experience with his U.S. Airways investment".

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