Why It's Unlikely Warren Buffett Is Actually Investing In Snowflake

Market Trading EssentialsSeptember 13, 2020

2 minutes read

BRK-A) (NYSE: BRK-B) invest $550 million in the upcoming Snowflake IPO.

However, experts familiar with Buffett’s investing philosophy say the Snowflake investment may not be what it seems.

New filings this week revealed that Berkshire is taking a $250 million stake in Snowflake at the IPO price in a secondary offering and is also buying another 4.04 million shares of Snowflake from a current investor in a secondary deal. At the midpoint of the expected IPO price range of $80 per share, Berkshire’s stake will be worth roughly $550 million.

UBER) IPO last year, Buffett said he hasn’t ever invested in an IPO in his 54 years on Wall Street.

Buffett said.” data-reactid=”27″>“The idea of saying the best place in the world I could put my money is something where all the selling incentives are there, commissions are higher, the animal spirits are rising, that that’s going to better than 1,000 other things I could buy where there is no similar enthusiasm… just doesn’t make any sense,” Buffett said.

Despite the headlines surrounding Berkshire’s Snowflake investment, Whitney Tilson said this week that Berkshire’s relatively modest position is likely not a sign that he has changed his philosophy on IPOs.

“Rather, it was likely initiated by executives Todd Combs or Ted Weschler (I’d guess Combs), who will eventually replace Buffett in managing Berkshire’s enormous investment portfolio,” Tilson said.

AMZN), likely referring to either Combs or Weschler.

“Both are more comfortable investing in the tech sector – and Buffett certainly isn’t going to second guess them, especially for such a small investment. $600 million is a drop in the ocean of Berkshire’s stock holdings, which were valued at $207 billion at the end of the second quarter,” Tilson said.

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