Warren Buffett’s Berkshire Hathaway is acquiring a $4 billion stake in chipmaker TSMC

Warren Buffett’s Berkshire Hathaway bought a $4.1 billion stake in chipmaker Taiwan Semiconductor Manufacturing Company in the third quarter, bringing a third tech company to the sprawling industrial conglomerate’s top holdings.

The purchase of 60 million US-listed shares from TSMC, disclosed with US securities regulators on Monday, was Berkshire’s largest new stock investment in the three months ended September.

It’s also the latest shift from the conglomerate, which includes insurer Geico, BNSF railroad and ice cream supplier Dairy Queen, into blue-chip tech companies.

Buffett has shown a greater willingness to invest in technology in recent years, with Berkshire’s stock portfolio now including Apple, computer and printer maker HP, and cloud database company Snowflake among his holdings.

The well-known value investor has had a sometimes strained relationship with the tech industry. He avoided making big investments in the sector for years, warning shareholders that he either doesn’t understand the workings or isn’t best equipped to evaluate the businesses of many high-tech companies.

But that has changed as the industry has matured and Buffett’s understanding of the sector’s place in the global economy has evolved. Berkshire now owns a $126.5 billion stake in Apple — the largest investment in a publicly traded stock.

Buffett, who has said he regrets passing on previous investments in Google-owned Alphabet and Amazon, has had his fair share of failures. The company invested and then sold its stake in IBM – admitting in 2017 that Big Blue faced intense competition from rivals. Berkshire also had a brief stake in Intel, buying shares in 2011 before selling off the next year.

Edward Jones analyst Jim Shanahan estimated that stocks in technology and communications companies now made up about half of Berkshire’s stock portfolio, which he said offered a balance given the conglomerate’s “portfolio companies that are more old-economy.”

It was unclear if Buffett led the investment in TSMC himself or if it was made by Todd Combs or Ted Weschler, two lieutenants who help oversee the company’s $306 billion stock portfolio.

Berkshire did not respond to a request for comment.

Changes to Berkshire’s investment portfolio were relatively small in the third quarter. The company also acquired a $13 million stake in investment bank Jefferies and bought building materials maker Louisiana-Pacific in a $300 million deal. It increased its investments in oil majors Chevron and Occidental and media company Paramount Global.

The company reduced its holdings in gaming group Activision Blizzard, banks US Bancorp and BNY Mellon, and automaker General Motors in the third quarter.

The relatively small adjustments follow a busy rush of deals by Berkshire this year, including its $11.6 billion acquisition of insurance competitor Alleghany. Analysts expect payment for the deal, which closed in October, will reduce the conglomerate’s $109 billion cash balance.

Licensing filings from major asset managers released Monday showed others were also shifting their tech holdings as a sell-off this year weighs heavily on the industry.

Appaloosa and Coatue Management reduced their stakes in Facebook parent Meta, while Glenview Capital Management divested its stake in the social media company.

https://www.ft.com/content/6d4bb1f4-270a-46bd-8069-81148b636647 Warren Buffett’s Berkshire Hathaway is acquiring a $4 billion stake in chipmaker TSMC

Adam Bradshaw

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