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Buffet's Berkshire Taking Interest in Technology: ETFs to Play

Sanghamitra Saha
·4 mins read

Billionaire investor Warren Buffett is known for his value style of investing and hesitance to invest in the technology sector. The reason could be that tech shares are generally not tagged as value shares.  These are high-growth in nature and valuations are often stretched. However, with changing times, the Oracle of Omaha’s Berkshire Hathaway Inc. BRK-B has also started taking interested in tech shares.

And why not? Technology stocks and ETFs have been the star performers in recent times. Instead of taking the shine out of it, the coronavirus outbreak has added more to the sector. Social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge on online shopping and work as well as learn from home.

The rapid emergence of cutting-edge technology, including cloud computing, big data, IoT, VR, AI, has been driving the sector. The growing adoption of 5G technology — the next wireless revolution — is opening up further opportunities. And most importantly, tech companies are cash-rich.

Against this backdrop, below we highlight some of Berkshire’s hot tech possessions that you could also follow.

Warren Buffett Bets Big on Apple

Apple AAPL represents about 43% of the Berkshire’s entire portfolio. Apple is benefiting from continued momentum in the Services segment, driven by strong App Store sales and robust adoption of Apple Music and Apple Pay. Non-iPhone devices, particularly Apple Watch and AirPod, are the other notable drivers. Apple’s focus on autonomous vehicles, cloud and augmented reality/virtual reality technologies presents growth opportunity for the long haul (read: Warren Buffett Bets Big on Apple: Buy These ETFs).

iShares Dow Jones US Technology ETF IYW, Select Sector SPDR Technology ETF XLK and Vanguard Information Technology ETF (VGT) puts considerable weight in Apple.

Amazon Gets a Place in Berkshire’s Shopping Cart

Berkshire also started buying Amazon last year. Amazon (AMZN) is a winning name this year thanks to its exposure to e-commerce and cloud computing. Berkshire Hathaway bought about $1 billion of Amazon shares in 2019.

Buffett has said repeatedly that Amazon is a great company and regretted not buying its shares in the past. Amazonis heavy on ETFs likeFidelity MSCI Consumer Discretionary Index ETF FDIS, ProShares Online Retail ETF ONLN and Consumer Discretionary Select Sector SPDR Fund (XLY).

Who Can Miss Snowflake?

Snowflake Inc. SNOW, a fast-growing cloud-software and data-warehousing company,just recorded the biggest software IPO of all time.Berkshire is backing Snowflake with the purchase of roughly $250 million of shares and an additional 4 million shares from another stockholder. And Buffett-backed Snowflake's value doubled on its stock market debut.

Berkshire Hathaway made about $800 million from Snowflake’s market debut on Sep 16, despite Warren Buffett’s reluctance for IPOs. Though shares have fallen more than 10% on Sep 17, such decline after a monstrous debut is not uncommon in the IPO field.

To catch Snowflake in the basket form, one may tap Renaissance IPO ETF IPO. The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed initial public offerings of companies whose unseasoned equities are under-represented in core U.S. equity indices. IPOs that meet liquidity & operational screens are included in the index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% and removed after two years.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
 
Renaissance IPO ETF (IPO): ETF Research Reports
 
iShares U.S. Technology ETF (IYW): ETF Research Reports
 
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
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Zacks Investment Research
 
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