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Buffett’s Berkshire Pegs Its Amazon Wager at $860.6 Million

Katherine Chiglinsky
Buffett’s Berkshire Pegs Its Amazon Wager at $860.6 Million

(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. revealed that its new Amazon.com Inc. bet totaled $860.6 million at the end of March.

The size of the holding, an investment made by one of Buffett’s deputies, gives more clarity to the wager that Buffett disclosed days before his annual shareholder meeting earlier in May. Berkshire also spent the first three months of the year ramping up bets on JPMorgan Chase & Co. and Red Hat Inc., and paring investments in Southwest Airlines Co. and Wells Fargo & Co., according to a regulatory filing Wednesday.

The Amazon holding underscores the growing influence of Buffett’s investing deputies, Todd Combs and Ted Weschler, who have been involved in Berkshire bets on airlines and Apple Inc. Buffett has praised the pair, and Berkshire Vice Chairman Charles Munger has credited the two with bringing “younger eyes” to Berkshire’s strategy. While Buffett has long admired Jeff Bezos, he’s typically steered clear of technology giants, disclosing a stake in Apple just three years ago.

Berkshire has deepened its ties with Amazon in recent years. The companies teamed up with JPMorgan Chase & Co. to form a health-care venture, led by Atul Gawande, that will focus on improving services and costs for their employees. Combs, also a member of JPMorgan’s board, has played a role in the formation of that venture.

Buffett’s company has waded deeper into the technology space in recent years. The company disclosed a wager on software company Red Hat last year, and boosted that investment by 22% in the first three months of 2019. The investment has proven to be a timely bet, as IBM agreed in October to purchase the company for $33 billion.

Other key takeaways from Berkshire’s 13F filing Wednesday:

Buffett’s company has deepened some of its bets on banks in recent months. Berkshire boosted its wager on PNC Financial Services Group Inc., and its stake in JPMorgan climbed 19% in the first three months of the year to 59.5 million shares valued at $6.02 billion at the end of the quarter.Berkshire didn’t boost all of its bets on financial firms. Its Wells Fargo holding dropped 4% to 409.8 million shares. Buffett has said he prefers to keep some bets below a 10% ownership threshold, which has sometimes been a driving force in cutting certain stakes.Berkshire’s bets on airlines diverged a bit. It trimmed its stake in Southwest 2.2% to 53.6 million shares, valued at $2.78 billion, while its investment in Delta Air Lines Inc. climbed to 70.9 million shares, a level Berkshire previously disclosed. Buffett said in March that crossing the 10% threshold in Delta was a mistake.Berkshire’s investment in Phillips 66 was cut by half in the first quarter. Buffett struck a deal in 2018 to sell back some of Berkshire’s shares in the oil refiner to get it under the 10% threshold. The holding has continued to shrink since then. Some of the Omaha, Nebraska-based conglomerate’s largest stakes remained unchanged. Berkshire’s Apple bet remained the same, at about 249.6 million shares, and it kept its wager on Bank of America Corp. steady, at 896.2 million shares.

(Updates with Red Hat stake in fifth paragraph, other bets in bullet points.)

To contact the reporter on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Alan Mirabella

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