2024-01-28 12:33:52
Warren Buffett is known as someone who almost never misses, but even he has exceptions. The person who is considered the best investor of all time missed a profit of about 1.5 billion dollars after selling shares of Costco in the third quarter of 2020. This was reported in Business Insider.
As someone known for long-term holdings and iron patience, Berkshire Hathaway surprised investors when, after two decades of ownership, it suddenly sold its entire position in the American wholesale giant in a three-month period.
According to the report, since Buffett’s departure, the company’s stock has jumped between 88% and 127%, reaching almost record prices. These percentages are based on Costco’s trading range ranging from $301 to $364 during the period Buffett was selling, and between the stock price of $684, as of last Friday’s close.
Berkshire’s journey with Costco began in 1999, with a modest investment that expanded to 4.3 million shares by mid-2020. If Berkshire held all of its shares in Costco today, they would be worth $3 billion. According to the report, she disposed of all of them for an amount estimated at $1.3 billion to $1.6 billion, depending on when exactly she sold. During this, Buffett’s holdings giant gave up between $1.4 billion and $1.7 billion.
Buffett admitted that lowering Costco was a mistake during Berkshire’s 2021 shareholder meeting. The mega-investor said Charlie Munger, his longtime business partner and die-hard Costco fan who died last November, allowed him to make only a handful of mistakes, and selling Costco was one of them.
The report also states that Buffett sold his shares in Costco because he wanted to free up cash to buy other higher-margin assets. Indeed, according to filings, Berkshire bought nearly $18 billion worth of stock at the same time it sold Costco. Thus, Berkshire increased holdings in four pharmaceutical companies with a total value of 6 billion dollars, and also increased its investment in Bank of America by more than 2 billion dollars.
Beyond that, Business Insider mentions that Berkshire’s stock portfolio is valued at more than $300 billion, so a profit of $1.5 billion won’t make much of a difference. Additionally, 2024 looks especially good for Buffett’s company, which saw its stock hit an all-time high this week, giving it a market value of about $840 billion. So it can be assumed that even if Buffett regrets selling Costco to some extent, it won’t cause him too much heartache.
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