Warren Buffett’s “buy and hold” rule doesn’t seem to apply to tech stocks

Bending his own rules.

Berkshire Hathaway has made a near-total exit from Taiwan Semiconductor Manufacturing Co. (TSMC) just three months after pumping $4.1 billion into the chip manufacturer.

Warren Buffett’s company cut its holding of TSMC’s American depositary receipts by 86% to 8.3 million shares last quarter, sending the chipmaker stock down 4% on Wednesday (Feb. 15).

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Typically averse to tech investments, the TSMC buy was an unexpected move from the “oracle of Omaha,” but it made sense given that the company is a key supplier for Berkshire’s “family jewel” Apple. Now, Buffett’s out-of-character quick disposal—he’s famous for his “buy and hold” philosophy, once telling shareholders: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”—is chilling investor sentiment toward the world’s largest foundry.

Berkshire Hathaway shies away from tech stocks…

Berkshire dabbles in tech, but only barely. And it’s been bending the rules of holding on.

Buffett called himself an “idiot” for not investing in Amazon before 2019, but still kept its exposure small with the e-commerce giant accounting for just 0.5% of the company’s portfolio. The stake Berkshire bought in HP last year comprises less than 1% of its portfolio.

It held stakes in IBM and Intel, but sold out. In the first quarter of 2022, Berkshire sold nearly all of its $8.3 billion stake in Verizon from late 2020.

Most recently, signs of reluctance have been pronounced in the swift growing-and-shrinking stake in the maker of the Call of Duty video games. While Berkshire grew its stake in Activision Blizzard to 9.5% in anticipation of the acquisition by Microsoft last May, it trimmed it to 6.7% by the end of the year as Microsoft battled regulatory headwinds in seeing the deal to the finish line.

…unless it’s Apple

The one tech stock the oracle of Omaha can’t get enough of is Apple. A relatively modest $1 billion investment in 2016 has become Berkshire Hathaway’s largest holding—so much so that Buffett thinks of…

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