How Warren Buffett’s investment choice evolves with time

May 07, 2019 08:53
Warren Buffett admits that Berkshire Hathaway has missed out on several tech companies. He also plans to invest more in China. Photo: Bloomberg

Apparently, 88-year-old billionaire investor Warren Buffett is still able to keep up with the changing investment space.

Buffett revealed at the Berkshire Hathaway’s annual meeting in Omaha over the weekend that the company has been buying shares of Amazon after it acquired shares of Apple and Oracle.

He used to say that he did not understand tech companies so he tried to avoid them.

While that helped him dodge the internet bubble in early 2000, Buffett has also missed out on the rise of big tech companies like FAANG – Facebook, Apple, Amazon, Netflix and Alphabet.

That could be part of the reason behind the less exciting performance of Berkshire’s securities portfolio in recent years.

In fact, both Buffett and his best partner Charlie Munger openly admitted that they’ve missed out on big tech names.

Berkshire’s recent investments show that Buffet has finally agreed that some of the internet and tech names are great companies and they meet his investment criteria.

Buffett said money managers who have bought shares of Amazon have used a slew of financial metrics to make the decision.

Meanwhile, Buffett also talked about investing more in China.

Previously, Buffett rarely bought Chinese shares apart from BYD (01211.HK, 002594.CN) that he is still holding and PetroChina (00857.HK, 601857.CN), which he already sold.

With China set to further open up its economy and possibly becoming the largest economy in the world, Buffett is adjusting his strategy.

When asked about China this time, Buffett said that he has always been open to investing in China. “We are buying things from China now, and we will buy more,” he said, adding that “there are some interesting companies in China".

In fact, Buffett shared two criteria he used in picking Chinese stocks last year, one is long-term ROE has to be above 20 percent and second is high growth potential.

Not many stocks fulfill such requirements. Kweichow Moutai Co. (600519.CN), Gree Electric Appliances Inc. (000651.CN) and Jiangsu Hengrui Medicine Co. (600276.CN) are some of the China-listed shares they could be on Buffett’s radar.

If Hong Kong or US-listed Chinese shares are also included, Tencent (00700.HK), Alibaba, some property names and Macau gaming stocks may also fit the criteria.

This article appeared in the Hong Kong Economic Journal on May 6

Translation by Julie Zhu

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Hong Kong Economic Journal columnist