REUTERS/Rick Wilking
- Warren Buffett’s Berkshire Hathaway invested $735 million in Snowflake when the cloud-data platform went public in September.
- The famed investor’s company bought around 6.1 million shares that have roughly tripled in value to as much as $2.1 billion on Monday — a roughly $1.4 billion unrealized gain.
- Many Berkshire investors were surprised by the Snowflake investment, as Buffett has avoided unprofitable technology companies and IPOs for most of his career.
- However, one of Buffett’s two portfolio managers and the CEO of Berkshire-owned Geico, Todd Combs, made the wager after experiencing Snowflake’s offerings as a customer.
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Warren Buffett raised some eyebrows when his Berkshire Hathaway conglomerate plowed $735 million into Snowflake when it went public in mid-September. The unusual bet is paying off so far: Berkshire’s 2.2% stake in the data-warehousing specialist has nearly tripled in value to north of $2 billion in less than three months.
The billionaire investor’s company shelled out $250 million for about 2.1 million shares in a private placement immediately after Snowflake’s IPO. It spent another $485 million to buy 4 million shares at the IPO price of $120 from former Snowflake CEO Robert Muglia in a secondary transaction.
Berkshire’s third-quarter portfolio update confirmed it held just over 6.1 million Snowflake shares worth $1.5 billion at the end of September. Snowflake’s stock price climbed as high as $342 on Monday, boosting the value of Berkshire’s stake in the company to around $2.1 billion — a roughly $1.4 billion gain on paper.
Many of Buffett's followers were surprised to see Berkshire bet on Snowflake, given the investor famously prefers proven, profitable, and undervalued companies in industries he understands. In contrast, Snowflake is a loss-making technology company with a lofty valuation and a limited track record.
However, Buffett hasn't reinvented himself at 90 years of age. Todd Combs, one of Buffett's deputies and the CEO of Berkshire-owned Geico, struck the deal after getting to know Snowflake as a customer.
Berkshire's Snowflake investment was one of several notable moves last quarter. Buffett's company also exited its Costco position after more than 20 years, eviscerated its JPMorgan stake, bought back a record $9 billion of stock, and spent more than $5 billion on pharmaceutical stocks.