Business_news Warren Buffett’s $570 million bet on Snowflake shows he completely trusts his deputies, investor Jake Taylor says

Business_news

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  • Berkshire Hathaway’s $570 million bet on Snowflake shows CEO Warren Buffett completely trusts his two portfolio managers, Todd Combs and Ted Weschler, one fund manager says.
  • “Buffett has given full agency to his lieutenants,” Jake Taylor, CEO of Farnam Street Investments and cohost of the “Value: After Hours” podcast, told business Insider.
  • “A high-profile tech IPO is a resounding confirmation that his actions match his words,” he added.
  • Taylor’s comments echo those of Paul Lountzis, who said the Snowflake investment proves Buffett “totally trusts Todd and Ted” in an interview this week.
  • Visit business Insider’s homepage for more stories.

Berkshire Hathaway’splan to investabout $570 million in Snowflake’s IPO shows that CEO Warren Buffett has complete faith in his deputies, Farnam Street Investments CEO and “Value: After Hours” cohost Jake Taylor told business Insider this week.

“Buffett has given full agency to his lieutenants,” Taylor said, referring to Berkshire’s portfolio managers, Todd Combs and Ted Weschler. “A high-profile tech IPO is a resounding confirmation that his actions match his words.”

“Any lingering doubts that these guys get to invest however they want has been extinguished,” he added.

Read moreA major fund manager explains the rationale behind Berkshire Hathaway’s $570 million investment in Snowflake’s IPO – and outlines why it’s a good sign for shareholders

Taylor’s comments echo those of Paul Lountzis, founder and president of Lountzis Asset Management, in aninterview with business Insider this week. 

Berkshire’s bet on Snowflake – despiteBuffett’s historical aversionto public listings, loss-making tech companies, and lofty valuations – demonstrates that he has “total trust in Todd and Ted,” Lountzis said.

Buffett has emphasized in the past that Combs and Weschler, whomanaged about $14 billion eachat the last count, are free to make their own investment decisions.

“They don’t have to check with me before they buy or sell anything,” he said in aYahoo Finance interviewin 2017. “It’s entirely their decision.”

Business_news Finding value

Snowflake is seeking a $24 billion valuation, more than 78 times its revenue last year. Yet Berkshire’s investment in the cloud-data platform isn’t a betrayal of Buffett’s signature value-investing approach, Taylor said.

“My personal view is ‘value’ can come in a lot of flavors,” he said. “Just because something isn’t statistically cheap doesn’t mean it can’t be mispriced.”

Read moreBuy these 16 tech stocks that are beaten down from the pandemic and now primed for explosive growth in the months ahead, Stifel says

Zachary Lountzis, Paul’s son and a vice president at his fund, made a similar argument. “Growth is a component of value,” he said, as a business can be be undervalued if the market underestimates its future earnings growth.

Buffett voiced a similar view at Berkshire’s shareholder meeting last year.

“All investing is value investing,” he said. “You’re putting out some money now to get more later on.”

“All the same calculation goes into it, whether you’re buying some bank at 70% of book value, or you’re buying Amazon at some very high multiple of reported earnings.”

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