Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) made a single new acquisition in the second quarter, and acquired shares of gold miner Barrick Gold Corp (GOLD). It’s a surprising move for the “Oracle of Omaha” which has long rejected the precious metal as an attractive investment.
As of June 30, Berkshire Hathaway’s closely followed and renowned stock portfolio held 20.9 million shares of Barrick Gold, a position valued at $ 563.5 million at the end of the quarter. Shares of Barrick Gold were up about 8% in the stock market near $ 29.05 per share on the heels of the investment made public.
The new position in Barrick Gold ranks as the 22nd largest investment in the portfolio. It is meager compared to the likes of the massive investments in Apple (AAPL), Bank of America (BAC), and Coca-Cola (KO).
What is surprising is that Buffett, and his right-wing husband, Berkshire Vice President Charlie Munger, have a long history of shelling gold, and characterize it as an unproductive asset.
“I would rather rely on the intrinsic value of a band of really fine companies, run by good managers who sell products that people like to buy and have wanted to buy for a long time, and then exchange their future efforts, the money. that comes from their pay, for See’s Candy or Coca-Cola or whatever, take one piece of metal that people dig out of the ground in South Africa and then put it back in the ground at Fort Knox, you know, to transportation and insurance and everything else, “Buffett said at the 2000 annual meeting.
What’s more, Buffett has often dismissed the idea of gold as a good store of value.
“I would say gold would be on my list as a store of value,” Buffett said at the 2005 annual meeting. “I mean, I’d rather have a hundred acres of land nearby here in Nebraska, as an apartment building,” as an index fund. ”
Buffett, whose father loved gold and was an ‘envious enthusiast’ for the gold standard, said at the 2012 annual meeting that he would “bet” his life on Berkshire and reprint the precious metal over a period of 50 years.
“[Not] only Berkshire will do significantly better than gold, but ordinary stocks as a group will do better than gold, and probably agricultural land will do better than gold. “I mean, if you have an ounce of gold now, and you know you’ll iron it for the next hundred years, then you’ll have an ounce of gold for a hundred years,” Buffett said at the time.
At the time, Munger, known for his quips and one-liners, stated 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 not imagine having a smaller audience than a bunch of gold bugs,” Munger added.
Maybe it was not Buffett who made the call
Perhaps what can be deduced from Berkshire’s recent share movement is that Buffett and Munger may change their minds, or at least give some autonomy to the newer decision makers, the young investor deputies, Ted Weschler and Todd Combs. It is unclear who made the decision to buy Barrick Gold.
However, this is certainly not the first time that the famous investment duo have changed their minds.
Historically, Buffett and Munger pushed away from tech companies, but now Apple is Berkshire’s largest stockholder. However, Buffett has indicated that one of his young investment deputies was responsible for the initial purchase of the iPhone maker’s stock.
At the end of 2016, Berkshire took over important positions in the airlines in late 2016, years after Buffett had sworn to buy an airline share.
At the 2017 Daily Journal Meeting (DJCO) in Los Angeles, Munger explained how he and Buffett have changed with age.
“Warren has learned better over time. I have learned better. The fun thing about the game we are in is that you can keep learning, and we still do,” Munger said at the time. He acknowledged that they once thought the airlines “were a joke, it was such a terrible business,” the same as they once did on the railroads.
At this year’s annual meeting in May, Buffett said Berkshire was leaving all its holdings of the airline, including American Airlines (AAL), Delta (DAL), United Continental Holdings (UAL), and Southwest Airlines (LUV), due to COVID -19’s limitation for the travel industry.
Julia La Roche is a correspondent for Yahoo Finance. Follow them up Twitter.
