Warren Buffett’s Berkshire Hathaway discloses Snowflake stake, confirming a rapid $800 million gain

Warren Buffett’s Berkshire Hathaway discloses Snowflake stake, confirming a rapid $800 million gain

September 29, 2020

Berkshire Hathaway chairman Warren Buffett sings and plays his ukulele with The Quebe Sisters Band at the Berkshire Hathaway annual meeting in Omaha May 1, 2010.

REUTERS/Rick Wilking

  • Warren Buffett’s Berkshire Hathaway confirmed the size of its Snowflake stake in a regulatory filing on Monday.
  • The billionaire investor’s company owns about 5.1 million Class A shares, or 2.2%, of the cloud-data platform’s outstanding stock.
  • Berkshire has notched a $800 million gain, as it spent $735 million on shares worth more than $1.5 billion as of Monday’s close.
  • The unusual bet shows that Buffett’s company is “evolving and becoming a much more tech-aware, tech-centric, tech-focused conglomerate,” Snowflake CEO Frank Slootman told Yahoo Finance.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett’s Berkshire Hathaway officially disclosed its stake in Snowflake on Monday, confirming it has scored a $800 million gain on its investment in the cloud-data platform.

The famed investor’s conglomerate owns about 6.1 million Class A shares, it said in a regulatory filing. The holding represents about 2.2% of Snowflake’s total outstanding shares, which include 40.4 million Class A shares and roughly 240 million Class B shares.

Berkshire spent $250 million to buy about 2.1 million shares in a private placement when Snowflake went public earlier this month. It bought another 4 million shares at the IPO price of $120 from former Snowflake CEO Robert Muglia in a secondary transaction, costing it $485 million.

The upshot is Berkshire splurged $735 million on Snowflake shares that have more than doubled in value to $1.5 billion, based on Snowflake’s closing share price of $250 on Monday. As a result, it has notched a $800 million gain.

More Snowflakes might drop

Berkshire’s Snowflake bet surprised many investors as Buffett has historically eschewed loss-making, aggressively valued technology companies and IPOs in favor of safer, cheaper wagers.

The unusual deal stemmed from Berkshire’s insurance unit being a Snowflake customer, CEO Frank Slootman told Yahoo Finance. It appears that Todd Combs, the CEO of Geico and one of Buffett’s two portfolio managers, was impressed by the company and expressed interest in becoming an investor. That explains why his signature appears in Snowflake’s IPO filing.

Berkshire’s Snowflake investment may look like an anomaly, but Slootman argued it was a product of structural change. Buffett’s company is “evolving and becoming a much more tech-aware, tech-centric, tech-focused conglomerate,” he said.

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