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Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) made just one new share purchase in the second quarter, acquiring shares in gold miner Barrick Gold Corp (GOLD). This is a surprising move for the “Oracle of Omaha” who has long rejected the precious metal as an attractive investment.
As of June 30, Berkshire Hathaway’s famed stock portfolio held 20.9 million Barrick Gold shares, a position valued at $ 563.5 million at the end of the quarter. Barrick Gold shares rose about 8% pre-market to nearly $ 29.05 per share following the release of the investment.
The new position in Barrick Gold is the 22nd largest investment in the portfolio. That’s tiny compared to the massive investments in Apple (AAPL), Bank of America (BAC) and Coca-Cola (KO).
What is baffling is that Buffett and his right-hand man, Berkshire Vice President Charlie Munger, have a long history of avoiding gold, calling it an unproductive asset.
“I would rather trust the intrinsic value of a bunch of really good companies run by good managers selling products that people have long loved to buy and love to buy, and then trade in their future efforts, the money that comes from them. salary, for See’s Candy or Coca-Cola or whatever, to take a piece of metal that people dig in the ground in South Africa and put it back in the ground at Fort Knox, you know, after you haul it and ensured that and everything else, ”Buffett said at the 2000 annual meeting.
Additionally, Buffett often dismissed the idea of gold as a good store of value.
“I would say gold would be way down my list as a store of value,” Buffett said at the 2005 annual meeting. “I mean, I’d rather own a hundred acres of land near ‘here in Nebraska, or an apartment building, or an index fund. ”
Buffett, whose father loved gold and was a “big fan” of the gold standard, said at the 2012 annual meeting that he would “bet” his life on Berkshire outperforming the precious metal over a period of 50 years.
“[Not] only Berkshire will do much better than gold, but common stocks as a group will do better than gold, and farmland will probably do better than gold. I mean, if you own an ounce of gold now and, you know, you stroke it for the next hundred years, you’ll have an ounce of gold in a hundred years, ”Buffett said at the time.
At the time, Munger, known for his jokes and one-liners, noted that they “never had the slightest interest in owning gold.”
“It’s a much better life to work with companies and people who are engaged in business. I can’t imagine a worse crowd to deal with than a bunch of golden bugs, ”added Munger.
Maybe it wasn’t Buffett who made the call
Perhaps what can be deduced from Berkshire’s latest stock move is that Buffett and Munger can change their minds, or at least they certainly empower new decision makers, young investment assistants, Ted Weschler. and Todd Combs. It is not known who made the decision to buy Barrick Gold.
Of course, this isn’t the first time the famous investor duo have changed their minds.
Historically, Buffett and Munger have shied away from tech companies, but now Apple is Berkshire’s largest stock stock. However, Buffett hinted that one of his young investment assistants was responsible for the initial purchase of shares in the iPhone maker.
At the end of 2016, Berkshire took over prominent positions in airlines at the end of 2016, years after Buffett vowed to buy an airline stock.
At the 2017 Daily Journal Meeting (DJCO) in Los Angeles, Munger spoke about how he and Buffett have changed with age.
“Warren learned better over time, I learned better. The good thing about the game we’re in is you can keep learning, and we still do,” Munger said at the time. He admitted that they used to think of the airlines as “a joke, it was such a terrible business”, as they used to do about the railways.
During this year’s annual meeting in May, Buffett said Berkshire had vacated all of its airline inventories, including American Airlines (AAL), Delta (DAL), United Continental Holdings (UAL) and Southwest Airlines (LUV ), due to COVID-19. disruption of the travel industry.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.
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