In their IPO prospectus 21 years ago, Google founders Larry Page and Sergey Brin paid tribute to Warren Buffett, acknowledging his influence in their letter to prospective investors. They entitled their founders' message 'An Owner's Manual for Google's shareholders,' suggesting a footnote deserved readers' attention. The footnote highlighted, 'Much of this was inspired by Warren Buffett's essays in his annual reports and his An Owner's Manual to Berkshire Hathaway shareholders.'
Now, over two decades later, Warren Buffett is reciprocating the admiration. On Friday, Berkshire Hathaway, Buffett's holding company, disclosed a substantial stake in Alphabet, Google's parent company, valued at approximately $4.3 billion by the end of the third quarter. This acquisition makes it Berkshire's 10th largest equity holding, illustrating one of its most significant technology ventures in recent years, aside from its prominent investment in Apple. Following this announcement, Alphabet shares saw a 3% increase on Monday.
This investment is a rare move for Berkshire, which has traditionally been cautious about entering high-growth technology sectors. Notably, this marks the first documented acquisition of Google shares by Berkshire. As Buffett, 95, plans to step down as CEO at the year's end, Greg Abel, his longtime associate, is set to assume leadership.
Buffett previously admitted in 2017 to regretting the decision not to invest in Google long ago, especially when Berkshire's insurance company Geico was incurring substantial costs for advertising on Google's network. He also recognized a missed opportunity with Amazon, which Berkshire finally invested in by 2019, and still holds $2.2 billion worth of its e-commerce stocks.