Buffett invested in TSMC
In the latest filing, Berkshire Hathaway disclosed three new stock positions in its portfolio, namely,
TSMC +$4,120 million
Louisiana Pac +$297 million
Jefferies Financial +$13 million
Of which, TSMC is the biggest position and perhaps the biggest surprise.
We won't know whether it was Buffett who made this investment decision or his deputies Todd Combs and Ted Weschler did.
But given the size of the position, it is likely Buffett who made the call.
TSMC is Berkshire's 11th largest position, representing about 1.3% of the portfolio.
This is a surprise because Buffett rarely venture out of US stocks. He invested in BYD in 2008 and a handful of Japanese stocks during the Covid period. That's about it.
You can argue that TSMC is listed in US (besides Taiwan), but that doesn't make it an American company.
Moreover it spells geopolitical risk - TSMC has 94% of its manufacturing done in Taiwan, a point of tension between the U.S. and China.
We must remember that this purchase was made last quarter, during the heights of hostility around Taiwan - Pelosi's visit in August, followed by China's military drills in the Straits.
While most investors shunned the risk, Buffett dove straight into it. How contrarian is that?
It might mean that Buffett doesn't believe a war would ever happen in the island and the selldown has made TSMC an attractive buy.
TSMC exhibits a typical Buffett stock. It is a clear market leader as it accounted for 54% of the global foundry market.
In terms of chip manufacturing technology, only Samsung could get close enough as it was able to mass-produce 3nm chips and heading to 1nm too. But capacity-wise, Samsung is a distance behind TSMC.
The rest of the foundries are nowhere near and it will take a long time (read years) and heavy capital expenditure to catch up, if ever. Hence, there lies TSMC's competitive advantage or moat.
But Buffett doesn't just buy a temporary moat. He wants a durable moat. TSMC's existing technology would not be able to sustain its competitive advantage forever. It has to keep investing in newer technology to stay ahead.
Innovation introduces risks and uncertainties as it cost a lot of money and may still fail. This is opposite to evergreen businesses like Coca-Cola where the recipe has not changed for a century, yet remains relevant.
Even for Apple, Berkshire's largest position, was not about innovation. Buffett bought it for the brand.
Hence, it could be the case that Buffett saw TSMC beyond its technology. TSMC is the go-to and trusted brand for any company who wants the best chips made. It is the branding, organisational know-how and the stature that are hard to replicate, rather than the technology.
The average buy price that Berkshire paid for TSMC was $75.16. The current share price is 3% lower at $72.80. But the share price jumped 6% during after hours trading following Berkshire's disclosure on this position. It will take a long time to see if Buffett get this right.
TSMC +$4,120 million
Louisiana Pac +$297 million
Jefferies Financial +$13 million
Of which, TSMC is the biggest position and perhaps the biggest surprise.
We won't know whether it was Buffett who made this investment decision or his deputies Todd Combs and Ted Weschler did.
But given the size of the position, it is likely Buffett who made the call.
TSMC is Berkshire's 11th largest position, representing about 1.3% of the portfolio.
This is a surprise because Buffett rarely venture out of US stocks. He invested in BYD in 2008 and a handful of Japanese stocks during the Covid period. That's about it.
You can argue that TSMC is listed in US (besides Taiwan), but that doesn't make it an American company.
Moreover it spells geopolitical risk - TSMC has 94% of its manufacturing done in Taiwan, a point of tension between the U.S. and China.
We must remember that this purchase was made last quarter, during the heights of hostility around Taiwan - Pelosi's visit in August, followed by China's military drills in the Straits.
While most investors shunned the risk, Buffett dove straight into it. How contrarian is that?
It might mean that Buffett doesn't believe a war would ever happen in the island and the selldown has made TSMC an attractive buy.
TSMC exhibits a typical Buffett stock. It is a clear market leader as it accounted for 54% of the global foundry market.
In terms of chip manufacturing technology, only Samsung could get close enough as it was able to mass-produce 3nm chips and heading to 1nm too. But capacity-wise, Samsung is a distance behind TSMC.
The rest of the foundries are nowhere near and it will take a long time (read years) and heavy capital expenditure to catch up, if ever. Hence, there lies TSMC's competitive advantage or moat.
But Buffett doesn't just buy a temporary moat. He wants a durable moat. TSMC's existing technology would not be able to sustain its competitive advantage forever. It has to keep investing in newer technology to stay ahead.
Innovation introduces risks and uncertainties as it cost a lot of money and may still fail. This is opposite to evergreen businesses like Coca-Cola where the recipe has not changed for a century, yet remains relevant.
Even for Apple, Berkshire's largest position, was not about innovation. Buffett bought it for the brand.
Hence, it could be the case that Buffett saw TSMC beyond its technology. TSMC is the go-to and trusted brand for any company who wants the best chips made. It is the branding, organisational know-how and the stature that are hard to replicate, rather than the technology.
The average buy price that Berkshire paid for TSMC was $75.16. The current share price is 3% lower at $72.80. But the share price jumped 6% during after hours trading following Berkshire's disclosure on this position. It will take a long time to see if Buffett get this right.
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吉大 : It's worth paying attention to...
MCGOOZLE : You mean 4.120 BILLION
Milk The Cow : TSMC $Taiwan Semiconductor (TSM.US)$ is a financial healthy & maybe strong company.
However, I'm surprised that he's so daring to invest in it given the conflicts between China & Taiwan
Milk The Cow Milk The Cow: Maybe it's so undervalued that he's willing to take the risk
or maybe he wanna diversify his portfolio region 
or may due to other reasons 
...
Milk The Cow Milk The Cow: It's just too risky no matters how I looked at it & I think it's kinda not worth it...
. It make super logical sense that there should be no war... 
Unless he's so confident/knows that there won't be a war
However, sometimes... ppl are just illogical creatures afterall...
Johnnie Worker Milk The Cow: A world leading chip manufacturer is not that risky at 14 PE. The business model of TSMC is quite amazing, making advanced chips to acquire crazy profit(if u look at its 50% margin u know iit's no joke), and leave the less advanced chips to its competitors, who earn much less.
Bluezingy Milk The Cow: "buy when others are fearful"...
Milk The Cow Bluezingy: Yup
.
.
= instant 10% increased 
.
already, even he is to close his position now 
.
.
He maybe right that there may not be a war & then it may take off in the future even more after all things calm down
Just saw the price, not sure if he continues buying or other institutional buy in also
If is others institutional, then he already earn 10 USD+ per share profits
Just his name is already worth the price increment valuation
Milk The Cow Bluezingy: Just imagined those traders who all in yesterday, they will also profited about 10 USD+ per share too
+
=
.
Milk The Cow Johnnie Worker: Guess the advanced tech for the chips make it worth holding for long-term investment
.
However, in the short-term, it rather seem like to has a decreased in demand for chips (world wide).
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