Here’s Why Warren Buffett Called Himself “an Idiot”

The Oracle of Omaha called himself an idiot for not investing in the King of e-commerce before. Warren Buffett can atone for the slip up by adding the Cargojet stock and Shopify stock to his empire’s investment portfolio.

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close-up photo of investor Warren Buffett

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Warren Buffett is a smart investor, if not the smartest in the world. You can measure his success by the billions he’s amassed in 78 years since he started investing at age 11. The value investor, however, called himself “an idiot” once, which is far-fetched given his enormous fortune.

Biggest regret

The year 2020 is Buffett’s Waterloo. People made money from the airline industry, but his conglomerate did not. Berkshire Hathaway dumped its entire airline stock holdings. But the bitter experience with airlines is not his biggest regret.

Buffett is lamenting not investing in Amazon.com early on. He admits underestimating the potential of the Jeff Bezos-led company. The humble online bookstore company in 1994 is the King of e-commerce today. Amazon delivers the most massive revenue in the world.

Buffett avoided technology-related stocks before because of a lack of understanding of the products and markets. Based on the SEC filing of Berkshire Hathaway on May 15, 2020, the company holds 533,300 Amazon shares worth US$1.4 billion.

Besides Restaurant Brands International and Suncor Energy, Berkshire should consider adding two more TSX stocks with excellent growth potentials.

Cargo, not passengers

Cargojet (TSX: CJT) is ruling the skies, as air cargo transport services are in high demand. The year-to-date performance is proof of why this airline stock should be on your radar. From $104.51 in early January, the price has risen by 50.85%. As of this writing, Cargojet is trading at $157.66 per share and paying a 0.60% dividend.

This $2.46 billion company posted impressive numbers in Q1 2020. Revenue, adjusted EBITDA, and the gross margin grew by 11.4%, 24.5%, and 52%, respectively, compared with the same period in 2019.

Cargojet is in full throttle with over $29 million in adjusted free cash flow, which was the best-ever free cash flow generation in a quarter. The company is well capitalized and oozing with liquidity. It can meet day-to-day future growth needs, as it flies over these uncertain times.

The growth estimate this year is 98.8% and 74.6% in 2021. Cargojet could end 2020 as one of the top-performing TSX stocks.

Next Amazon

Shopify (TSX:SHOP)(NYSE:SHOP) is an Amazon in the making. As of June 19, 2020, this $140.28 billion e-commerce company is the largest publicly listed company on the TSX. It has been in operation for 16 years with a similar humble beginning.

The founders put up an online store for snowboarding equipment. Today, about 600,000 small- and medium-sized businesses or merchants are peddling their goods and services through Shopify’s multi-channel commerce platform.

In Q1 2020, revenue grew by 47% year over year, which was the same during the previous holiday quarter. Subscriptions also surged by 34%. As a result, Shopify saw its adjusted net income triple year over year, too. Shopify investors are riding high on a 127.57% year-to-date gain. The growth is happening despite the pandemic.

Canada is launching a contact-testing COVID-19 app in early July 2020. According to Prime Minister Justin Trudeau, the federal government is working with Shopify and Blackberry for the development of the said app.

Another slip-up?

Warren Buffett is a fan of the online retail giant but a self-proclaimed idiot for not investing in the stock in the past. He might regret not taking a position in Cargojet and Shopify someday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Christopher Liew has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), CARGOJET INC., Shopify, and Shopify. The Motley Fool recommends BlackBerry, BlackBerry, and RESTAURANT BRANDS INTERNATIONAL INC and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon.

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