In the past, Warren Buffett tended to avoid the technology sector when picking stocks for his investment company Berkshire Hathaway (NYSE:BRKa). This was due to the fact that he didn’t understand it very well, and one of his main investing rules is that he only invests in things he understands. Take a look at his portfolio and you’ll generally find companies that have very simple business models, such as Coca Cola, Kraft, and American Express (NYSE:AXP). However, in recent years, Buffett’s view on technology appears to have changed dramatically. The Oracle (NYSE:ORCL) of Omaha is now buying tech stocks for his portfolio.
Buffett is buying tech stocks For example, as I noted in an article late last year, Buffett has built up a substantial holding in iPhone maker Apple (NASDAQ:AAPL) in recent years. Currently, Apple is his largest holding and his position is worth over $50bn. Buffett has stated that he likes Apple because of “the value of their ecosystem and how permanent that ecosystem could be” and has also remarked that he would own 100% of Apple stock if he could.
More recently, it’s come to light that Berkshire has also taken a stake in Amazon (NASDAQ:AMZN). Apparently, this was not Buffett’s personal decision and the call was made by one of the Berkshire Hathaway portfolio managers. However, Buffett has said he would not “second guess” their decision. Additionally, Berkshire took a sizeable position in Red Hat – a major player in cloud services development – earlier this year.
It’s also worth noting that Buffett’s billionaire business partner Charlie Munger recently told investors that he and Buffett were “ashamed” that they hadn’t invested in Google, which has grown to become one of the world’s most valuable companies. “We just sat there sucking our thumbs,” Munger said. “We screwed up.”
Clearly, Buffett and his team see long-term investment appeal in the technology sector now.
How UK investors can follow Buffett When it comes to large-cap technology stocks, UK investors don’t have a lot of choice, as the FTSE 100 is rather light on technology. However, that shouldn’t stop you investing in the technology sector if you want to emulate Buffett. It certainly hasn’t stopped me.
One easy way to get some US tech exposure is through global equity funds as these often have a healthy weighting to the technology sector. For example, the Fundsmith Equity fund, which I have owned for a while, has a substantial position in Microsoft Corp (NASDAQ:MSFT).
I’ve also begun accumulating positions in the Polar Capital Global Technology fund, which counts the likes of Microsoft, Google, and Amazon among its top six holdings, as well as the Scottish Mortgage Investment Trust, which is also tech-focused.
Finally, I’ve bought shares in both Apple and Google in recent months, as I believe that both companies look extremely attractive from a long-term (20-year plus) view.
The takeaway here is that if you’re looking to follow Buffett and invest in technology, don’t let the fact that you’re based in the UK hold you back. These days, it’s easier than ever to get exposure to world-class technology stocks that are listed internationally.
Edward Sheldon owns shares in Apple, Google and Scottish Mortgage Investment Trust and has position in the Fundsmith Equity fund and the Polar Capital Global Technology fund. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet (NASDAQ:GOOGL), is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn (NYSE:LNKD), a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Apple, and Microsoft. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019