In the past, Warren Buffett tended to avoid the technology sector when picking stocks for his investment company Berkshire Hathaway. This was due to the fact that he didnât 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 youâll generally find companies that have very simple business models, such as Coca Cola, Kraft, and American Express. However, in recent years, Buffettâs view on technology appears to have changed dramatically. The Oracle 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 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 âthe value of their ecosystem and how permanent that ecosystem could beâ and has also remarked that he would own 100% of Apple stock if he could.
More recently, itâs come to light that Berkshire has also taken a stake in Amazon. 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 â a major player in cloud services development â earlier this year.
Itâs also worth noting that Buffettâs billionaire business partner Charlie Munger recently told investors that he and Buffett were “ashamed” that they hadnât 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 donât have a lot of choice, as the FTSE 100 is rather light on technology. However, that shouldnât stop you investing in the technology sector if you want to emulate Buffett. It certainly hasnât 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.Â
Iâve 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, Iâve 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 youâre looking to follow Buffett and invest in technology, donât let the fact that youâre based in the UK hold you back. These days, itâs easier than ever to get exposure to world-class technology stocks that are listed internationally.