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Warren Buffett’s Berkshire Hathaway has taken a stake in Amazon (+3.24%), the investing demigod told CNBC. Important programming note: Buffett made it clear it wasn’t he who bought Amazon stock, but rather “one of the fellows in the office that manage money.” He has a name, Warren. And that name is likely Todd Combs or Ted Weschler, Buffett’s protégés at Berkshire. That Berkshire (or Todd or Ted) is investing in Amazon is significant. Buffett’s held a special place in his Coke-filled heart for Amazon and CEO Jeff Bezos, but he never bought shares... "I’ve been an idiot for not buying," Buffett said this week. In 2018: "I had no idea that it had the potential. I blew it." And here’s an excerpt from an interview he did with us: Giphy So why now? Buffett (whose entire shtick is value investing) had shunned the move-fast-and-break-things tech sector for years. But then he greenlit a sizeable investment in Apple, a stake which has since grown to more than $40 billion. And now, Berkshire has put Buffett’s stamp of approval on Amazon, a company that only recently started thinking about profit. This could offer a glimpse into Berkshire once Buffett is gone (he’s 88 years old). Todd and Ted have gained influence in Berkshire’s day-to-day, earning Buffett’s praise for A+ investments like Apple and airline stocks. Buffett’s BFF Charlie Munger says they’re Berkshire’s “younger eyes.” Looking ahead: Investors will get even more insight into Berkshire’s future this weekend, when Buffett hosts his annual shareholder meeting in Omaha. We’re also counting on more color re: Berkshire’s recent Occidental Petroleum deal, its Amazon stance, and its massive cash pile. + While we’re in Omaha: We present you with Buffett Bingo, c/o the WSJ. Morning Brew
Warren Buffett's conglomerate interrupted a beautiful Saturday by reporting quarterly earnings. But we'll forgive him. Because Buffett's empire touches, well, just about everyÂ aspect of the U.S. business landscape (okay, maybe not esports...yet), checking outÂ Berkshire's quarterly reportsÂ gives us a window into the health of the economy. Quick timeout:Â If you've never been to Berkshire's website before...here's a taste of what you can expect. Web developers, you might want to submit a rÃ©sumÃ©. So...how'd it do? At a high levelÂ—really darn well. Net income almostÂ tripled, but per Buffett, chalk that up to aÂ new accounting ruleÂ that requires you to include unrealized investment gains/losses in net income. Because Berkshire has so many investments, that number can fluctuate wildly. Where youÂ shouldÂ be looking, he says, isÂ operating income, which jumped 67% (topping expectations). Let's dive a little deeper: Its freight rail businessÂ (BNSF Railway) surged due to "general economic growth" generating higher demand for consumer and industrial goods (sand, fertilizer, grain). InsuranceÂ (GEICO and others) also rebounded. Underwriting profit came in at $943 million, up from aÂ lossÂ of $22 million last year. One catalystÂ for all this growth was the corporate tax cut. In Q2, Berkshire paid an effective income tax rate of 20%, down from 28.9% last year. And then there's tech:Â Tech? Buffett? You bet. Buffett has been steadily increasing his position in Apple. Which, you may have heard, hit $1 trillion in market cap last week. Now, $47.2 billion of Berkshire's ~$180 billion stock portfolio isÂ invested in Apple. Berkshire's other top holdings? American Express, Bank of America, Coca-Cola, and Wells Fargo. Bottom line, courtesy of one analyst:Â "Strength in Berkshire's portfolioÂ of energy, transportation, service, retailing, and manufacturing businesses...reflect(s) broad U.S. economic strength."