iPhone-maker Apple remains Warren Buffett’s biggest single stock holding as of December 31, 2020 (42.2% of the total stock portfolio). However, market observers and Buffett’s loyal followers noticed that Berkshire Hathaway reduced its position in Q4 2020. While the 6% reduction in stake doesn’t indicate declining faith in the blue-chip asset, it could impact tech stocks.
Nick Colas, a co-founder of DataTrek Research, sees no tech bubble, but the elevated amount of capital flowing into tech stocks could lead to a quick, violent rotation. The pressure on Apple and big tech names could persist throughout 2021. Berkshire made sizable new stakes in Chevron and Marsh & McLennan, both non-tech stocks.
The information technology sector in Canada was the runaway winner in 2020. In 2021, it ranks seventh (+3.57%) out of the top 10 performing sectors. The healthcare (+52.83%) and energy (+37.42%) sectors outperform last year’s high flyers.
Nonetheless, the selloff in tech stocks opens excellent buying opportunities, especially for growth investors. The likes of Absolute Software, BlackBerry, and WELL Health Technologies could deliver superior returns in the future. Shopify is a solid choice, although the stock price is sky high already.
Goodfood Market and Nuvei are dark horses, because their growth potentials are visible. The same is true for Docebo, Lightspeed POS, and Real Matters. If you review Buffett’s 2021 stock portfolio, tech stocks comprise only 8.2% of the total. Besides Apple, Berkshire has stakes in Amazon.com and Snowflake.
Notably, the GOAT of investing had increased holdings in T-Mobile and Verizon Communications. It could be a sign he sees better opportunities for his money in telecom stocks over the next 12 months. Many investors will follow the lead of market influencers like Warren Buffett. He always finds the best use for his dollars.
Alternative to tech stocks
An earth-shaking development happened on the TSX recently involving telecommunications companies. Canada might soon see its second-biggest telecom after Rogers Communications (TSX:RCI.B)(NYSE:RCI) offered to acquire Shaw Communications. The deal is worth $26 billion, including debt. However, it could face rigid regulatory scrutiny. Rogers’s share price rose 3.3% on March 15, 2021, while Shaw popped 41.6%.
Rogers’s commitment is to invest $2.5 billion in 5G networks across Western Canada over the next five years. Furthermore, the $31.29 billion communications and media company will create a $1 billion fund exclusively for rural, remote, and indigenous communities. People in these areas will gain access to high-speed internet service.
BCE is currently the largest telco, followed by Telus. Should the deal obtain regulatory approval, it would be the biggest deal in Canada’s telecom industry. The surviving entity will likewise unseat Telus on the second spot. However, shareholders must approve the deal first.
The independent Competition Bureau of Canada will review the Rogers-Shaw merger after. Other reviewers include the Canadian Radio-television and Telecommunications Commission and the federal department of Innovation, Science, and Economic Development.
Joe Natale, Rogers’s CEO, is confident the transaction will pass scrutiny and obtain approval from Canadian regulators. He sees no overlap between the respective cable and internet businesses. The deal could close by the first half of 2022.
Looking for fruitful investments
Warren Buffett believes in the brand power and competitive advantages of a company. He’s not entirely ditching Apple but bringing his money to other sectors that could deliver exceptionally profitable returns.
Speaking of whether investors should avoid tech stocks after Warren Buffett reduced his stake in Apple...
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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 and Apple. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), Shopify, Shopify, and Snowflake Inc. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends BlackBerry, BlackBerry, Goodfood Market, Real Matters Inc, ROGERS COMMUNICATIONS INC. CL B NV, TELUS CORPORATION, T-Mobile US, and Verizon Communications and recommends the following options: short March 2023 $130 calls on Apple, short March 2021 $225 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), long January 2022 $1920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1940 calls on Amazon, and long January 2023 $200 calls on Berkshire Hathaway (B shares).