Warren Buffett’s Tech IPO Is up a Mind-Boggling 200% in 3 Months

It took only three months for Warren Buffett’s conglomerate to earn $1.4 billion from a tech IPO. Perhaps he should also consider BlackBerry stock in the TSX, which is showing massive growth potential.

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Warren Buffett hasn’t lost his touch, contrary to the observations of many when COVID-19 struck in March 2020. The GOAT of investing did it again with a smart move in Snowflake. Interestingly, Buffett avoided investing in the technology sector for years, especially tech IPOs.

His conglomerate Berkshire Hathaway is now richer by US$1.4 billion on paper after its investment in the cloud-data platform tripled in value on November 30, 2020. As of December 7, 2020, Snowflake is trading at US$388.96 per share, or 224.13% higher than its IPO price of US$120.

Notable stock purchases

Snowflake is just one of several eye-catching investments of Berkshire Hathaway in the most recent quarter. With news of a coronavirus vaccine development, Buffett’s investment firm purchased more than US$5 million worth of pharma stocks.

The new additions to Berkshire’s stock portfolio (as of September 30, 2020) include AbbVie, Bristol Myers Squibb, Merck, and Pfizer. More investors are likely to gravitate toward the pharmaceutical industry. Buffett’s foray gives others the confidence to invest in a not-so-stable sector. However, the broader pharma space would benefit significantly from COVID-19 vaccines and related therapeutics.

Tech juggernaut

Berkshire Hathaway has only two Canadian stocks in its portfolio: Suncor Energy and Barrick Gold. For a long time, the company held Restaurant Brands International until Buffett lost confidence in businesses affected by shutdowns. The Oracle of Omaha might take a position in Canadian tech stocks soon.

On March 23, 2020, the S&P/TSX Composite Index lost big time and sunk to the bottom. However, after more than eight months, Canada’s primary stock market has recouped almost $700 billion in market value. The TSX is already gaining year to date, although the technology sector is outperforming the index by a mile (+52.53% versus +3.04%).

The technology sector has a small weighting on the TSX but has been the top performer for most of 2020. Shopify, the renowned e-commerce platform, is leading the advance and is now the largest publicly listed company in Canada.

Exciting development

If Shopify is too expensive for you, BlackBerry (TSX:BB)(NYSE:BB) is a cheaper ($8.25 per share) but promising alternative. The former smartphone titan is beginning to make waves. Year to date, the tech stock is up 28.5%. Some analysts believe the long-awaited turnaround is at hand.

BlackBerry is now a prominent provider of intelligent security software and services to enterprises and governments globally. The company is moving in the right direction, particularly in the cybersecurity space and the automotive vertical. Investors’ interest should heighten in 2021 due to a partnership with Amazon Web Services.

The two firms formed a partnership and will collaborate to develop further and market IVY, BlackBerry’s intelligent vehicle data platform. It’s a cloud-based software platform that assists automakers in gathering and analyzing data from vehicle sensors.

It’s an exciting development and innovative if the new cloud-connected intelligent vehicle data platform can leverage vehicle data to recognize driver behavior and hazardous conditions. The plan is to build, deploy, and monetize new in-vehicle applications and connected services across multiple vehicle brands and models.

Market influencer

Warren Buffett continues to exert influence on investors and the stock market. His involvement in a tech IPO and drug companies in 2020 appears unusual. However, it also shows the value investor still knows where to bet his money.

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), Bristol Myers Squibb, Shopify, Shopify, and Snowflake Inc. 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, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares).

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