09 september 2020
14:24
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Warren Buffett continues to walk unusual paths to put his cash mountain to work. The super investor pumps 570 million dollars into the IPO of the tech pearl Snowflake.
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With the latest investment from his investment vehicle Berkshire Hathaway, Warren Buffett is breaking two of his habits: don’t invest in tech and stay away from initial public offerings (IPOs). With the American Snowflake, a start-up in data storage in the cloud, he is now entering a purebred tech company. He does so through the imminent IPO of Snowflake, which is signing for one of the largest IPOs of the year.
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For the technophobic Buffett, the investment in Snowflake is a rare foray into the technology world.
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An update of Snowflake’s IPO documents reveals that Berkshire Hathaway is buying shares for $ 250 million on IPO. In addition, it is acquiring a package of 4 million shares from one of Snowflakes investors for an additional $ 320 million. All in all, this is a $ 570 million investment in an IPO that is eagerly awaited. Snowflake aims to raise more than $ 2 billion in its IPO, which would value the company at more than $ 23 billion.
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Technofoob
For the technophobic Buffett, the investment in Snowflake is a rare foray into the technology world, which he avoided for decades due to its unpredictable nature. His maxim of investing in what you know largely caused him to miss the boom in tech stocks. In 2011 he took a gamble with an investment in IBM, but it was not a success.
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The Snowflake investment shows Buffett stepping out of his comfort zone to put his record $ 147 billion cash mountain to work.
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His position in Apple, built up since 2016, is a hit. A first investment in Amazon followed in 2019. These two investments came at the initiative of his employees Todd Combs and Ted Weschler. 90-year-old Buffett has already called himself ‘an idiot’ for waiting so long to jump on the technology train.
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StoneCo
An IPO investment is also exceptional for Berkshire Hathaway. In May, Buffett said he had never participated in an IPO in 54 years. That was not entirely correct: in 2018 he bought shares with the IPO of the Brazilian fintech player StoneCo. Its rate has more than doubled.
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The Snowflake investment shows Buffett stepping out of his comfort zone to put his record $ 147 billion cash mountain to work. Earlier this summer he made his mark with an investment in the gold mining group Barrick Gold, while he had always been extremely skeptical about gold investments. Last week he surprised by turning his gaze to Japan. There he paid $ 6 billion for equity interests in five trading houses, a kind of conglomerates with a focus on energy and commodities.
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