Buffett no longer Intel Inside
Still owns $13bn stake in Big Blue
Warren Buffett, the Oracle of Omaha and one of the world's richest men, has dumped his Intel stock, setting tongues a-wagging around the tech world that he might know something the rest of us don't.
According to a 13F filing with the US Securities and Exchange Commission for Berkshire Hathaway, Buffett's holding company, you can see that as of June 30, Buffett had sold off his 7.75 million shares in Chipzilla before the second quarter ended. At the end of March, when Buffett made a similar 13F filing, those Intel shares were valued at $217.8m.
Buffett has never been a big investor in tech stocks, preferring insurance and financial services companies as well as Coca Cola, Proctor and Gamble, and Wal-mart, among others.
But last year he amassed a 5.5 per cent stake in IBM over a number of quarters, which was worth $10.7bn back in November when he disclosed his large position in Big Blue. In March, he had 64.4 million shares valued at $13.4bn, and at the end of June he had 66.6 million shares. But because IBM's stock was down a bit over those 13 weeks, they were only worth a hair more than $13bn. ®
That's probably a fair assessment. He's not sentimental about his investments and it might be simply that he has found somewhere else to put that money which he thinks will provide a better return, or feels more comfortable with.
...few months back I heard someone say that because Buffett has invested in Intel, Intel no longer seems to be a technology company! Looks like Intel has once again become a technology company ;)
Jokes apart, I think he invested in tech not because all of a sudden he was in love with these tech companies, but because he was left with no choice. With all the other sectors going downhill he had to park his money somewhere, and few months back tech did look comparatively positive. Now things are not that volatile and there seems to be some uptick in other sectors, hence the dumping of tech stocks by the Oracle Of O. Now, you ask, why did he not dump IBM stock then!?! Well, because he is a business man, he is not going to dump his stock when it is slightly down. According to the Reg article, he is in red with regards to the IBM stock. Once he gets slight profit on that he will start dumping that stock too. He always parrots his invest mantra that `he does not invest in the sector which he does not understand`, and the rational he gave on investing in IBM and Intel was that they both are forcefully pushing towards "software services" arena which, according to him, is far better that whatever IBM and Intel are doing nowadays. IBM has already made headwinds in that regards and Intel is pushing hard before the ARM ecosystem makes hardware a low margin commodity business. Now having said that, holding any investment in Intel at this juncture for a long-term investor like Mr. Buffett did not make sense in the first place, because these are final few years of Otellini at Intel. Any concrete strategic direction that Intel will take will happen only when the new CEO steps in. Until then any serious long-term investor will use companies like Intel as a stop-gap measure, to exit only when market starts settling. So calm down people, Intel is going nowhere as long as they have huge stash that they can use for wading off another FTC or EU Commission enquiry! I don't see any "insider information" type prognosis here.
Now, where is my Raspberry Pi??
I'm not too surprised firms like Berkshire Hathaway don't invest much in tech stocks. They're too volatile for investment firms like that, who usually go with stalwarts (ie. IBM and Intel, two of the oldest tech companies still in good standing) that have longer-term strength: the "slow and steady" approach.
People put too fine a point on Buffet "not investing in technology." He didn't invest in .com companies in particular because he did not see the business model and thought the valuations were crazy... which ended up being true for all but Google. People pegged him as "not investing in tech" because everyone had everything in tech companies in those days. He doesn't have an issue with technology, he has an issue with valuations which don't mirror the cash the business generates.
I don't Buffet is in the red on these, overall he's still a couple of Billion up on his original investment of 10.7Billion plus however much the extra 2 million shares cost him in June.
His average price of the 64million original shares purchased was around $170, seeing as they are trading at almost $200 now I'd say he's still very much in the black on them.