Warren Buffett's famous value investing means he checks the intrinsic value of a company before buying its shares. The companies that find a spot on his screen are those that show they can endure.
His strongest criticism of cryptocurrencies has been that they have no intrinsic value. His observation that cryptos do not produce anything kept Berkshire Hathaway away from digital banking, crypto firms and NFTs for a long time.
That has been changing, however. Buffett's recent SEC filings show that the highly acclaimed value investor is opening up to some of these more speculative assets, at least indirectly.
Metaverse Plays
Buffett's most notable recent purchase that opens him up to cryptos is Activision Blizzard.
The acclaimed long-term investor purchased 14.66 million shares of Activision Blizzard in December 2021 and increased his stake to 64.3 million in March, then to 68.4 million in June. His total stake is now a whopping 9.5% of total shares.
Though his first purchase was before Microsoft announced an agreement to acquire Activision, later purchases were made after the news.
The company, which Microsoft hopes to acquired for $68.7 billion, is the biggest deal in the software giant's history and signals Microsoft's entry into the emerging metaverse experiments with virtual experience and digital assets, including digital currencies and NFTs. The deal faces antitrust objections in the U.K., however.
Buffett's Stake in Digital Banking and NFT
The Oracle of Omaha bought $1 billion of NU Holdings in February. Earlier, it took a $500 million stake in January before the company's IPO in December 2021.
Warren Buffett rarely takes positions in pre-IPOs or IPOs, and typically waits to see a few quarters and even a few years before weighing in. Two recent exceptions have broken that rule: Snowflake is one and NU Holdings is the other.
Snowflake's data cloud marketplace is already seeing growth in NFTs. Berkshire Hathaway has held 6.1 million shares of Snowflake since picking them up in September 2020, when the company went public. SNOW's July-quarter revenue grew 83% to $497 million from the previous year.
Nu Bank, the subsidiary of NU Holdings, offers digital banking and peer-to-peer transfers. NU had its IPO on the New York Stock Exchange in December 2021 and launched NU Pay and NU Crypto in 2022. It also started crypto trading and custody this year.
The fintech added 5.7 million customers in the most recent quarter including 1 million for its crypto platform. Revenue growth of $230% from the previous year after adjusting for currency fluctuations. NU holds 1% of cash in Bitcoin.
Berkshire bought 107 million shares of NU, which was 0.2% of total portfolio holdings. Visa and Mastercard holdings accounted for 0.5% and 0.4% at the end of the first quarter.
After NU shares plunged after the IPO, its 107 million shares accounted for just 0.1% of Buffett's holdings as of June 30. Though the stock is down, Buffett continues to hold them all. On the other hand, he sold a few million shares of Visa and Mastercard shares during the same period.
The company also has a position in Brazilian digital payments firm StoneCo.
Warren Buffett's Blue Chip Holdings Are Going Digital
In February, Buffett's largest holding, Apple, announced that iPhones would support crypto payments through digital wallets. Apple accounted for 41% of Berkshire Hathaway as of June 30.
Amazon.com is already a bedrock for several public blockchains that operate on their own cryptos, including Ethereum.
In August 2021, Coca Cola, one of Warren Buffett's favorite and long-term holdings, succeeded its first NFT to support the Special Olympics.
Most of the stocks discussed here, with the exception of NU and SNOW are trading below their 50-day moving average.
