Buffett’s Berkshire Hathaway announces $4.1 billion stake in TSMC

Buffett's Berkshire Hathaway announces $4.1 billion stake in TSMC
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Nov 14 (Reuters) – Berkshire Hathaway Inc (BRKa.N) said it bought more than $4.1 billion worth of shares in Taiwan Semiconductor Manufacturing (2330.TW)a rare major foray into the tech sector by billionaire Warren Buffett’s conglomerate.

The news sent shares of TSMC soaring, closing up 7.9% in Taiwan on Tuesday, as it boosted investor sentiment for the world’s largest contract chipmaker, whose shares fell last month on a sharp slowdown in global chip demand hit a two-year low.

In a regulatory filing Monday, reflecting its Sept. Dec. US-listed equity investment, Berkshire said it owns approximately 60.1 million US depositary shares of TSMC.

TSMC’s other overseas investors include US wealth managers BlackRock Inc (BLK.N) and Vanguard Group Inc, and GIC of Singapore Sovereign Wealth Fund (GIC.UL).

Berkshire also announced $297 million in new shares in building materials company Louisiana-Pacific Corp (LPX.N) and $13 million in Jefferies Financial Group Inc (JEF.N). It rose from an investment in Store Capital Corp (STOR.N)a real estate company that agreed to privatize in September.

The filing did not specify whether Buffett or his portfolio managers Todd Combs and Ted Weschler made specific purchases and sales. Investors often try to leverage what Berkshire is buying. Bigger investments are usually buffetts.

While Berkshire doesn’t typically make big technology bets, it often favors companies it believes have competitive advantages, often because of their size.

TSMC, which makes chips for companies like Apple Inc (AAPL.O)Qulacomm (QCOM.O) and Nvidia Corp (NVDA.O), posted a jump of 80% in quarterly earnings last month but struck a more cautious note than usual on upcoming demand.

“I suspect Berkshire believes the world cannot do without the products Taiwan Semi makes,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire stock.

“Only a small number of companies can raise the capital to supply semiconductors, which are increasingly central to people’s lives,” he added.

Berkshire has had mixed success in the technology space.

His more than six years of service over the past decade at IBM Corp (IBM.N) didn’t work out, but Berkshire is sitting on huge unrealized gains from its $126.5 billion stake in Apple, which Buffett views more of a consumer goods company.

Apple is by far the largest investment in Berkshire’s $306.2 billion stock portfolio.

Berkshire announced the TSMC stake about 2 1/2 months after it started to reduce a ten-year-old multi-billion dollar stake in BYD Co (002594.SZ)China’s largest electric car company.

During the third quarter, Berkshire increased its stake in Chevron Corp (CVX.N)Occidental Petroleum Corp (OXY.N)Celanese Corp (CE.N)Paramount Global (PARA.O) and R.H (RH.N).

It also sold shares in Activision Blizzard Inc (ATVI.O)Bank of New York, Mellon Corp (BK.N)General Motors Co (GM.N)Kroger Co (KR.N) and US Bancorp (USB.N).

Buffett, 92, has run Berkshire since 1965. The Omaha, Nebraska-based company also owns dozens of companies including BNSF railroad, auto insurer Geico, several energy and industrial companies, Fruit of the Loom and Dairy Queen.

Reporting by Jonathan Stamp in New York; Edited by Bradley Perrett and Stephen Coates

Our standards: The Thomson Reuters Trust Policy.

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