Buffett says he started Berkshire’s Alphabet stake and explains Gates shift

Warren Buffett told CNBC that he, rather than Berkshire Hathaway CEO Greg Abel, started the conglomerate’s large investment in Alphabet. For investors tracking Berkshire, the interview clarified who is still shaping the company’s stock portfolio and why Buffett is redirecting future charitable gifts away from the Gates Foundation.

In a nearly one-hour CNBC interview with Becky Quick, Buffett also said Bill Gates’ past association with Jeffrey Epstein was “distasteful,” but he downplayed it as the main reason he is ending future donations to the Gates Foundation. Buffett said the bigger driver is his belief that his three children are now ready to give away large sums responsibly.

Buffett says his children are ready for more

CNBC reported that Buffett has donated nearly $48 billion in Berkshire shares to the Gates Foundation over about 20 years, based on the value at the time of the gifts. During the same period, he gave almost $18 billion to foundations tied to his family: the Sherwood Foundation, the Howard G. Buffett Foundation, the NoVo Foundation and the Susan Thompson Buffett Foundation.

Buffett told CNBC he did not have the same confidence in his children’s philanthropic judgment in 2006, when he began giving to the Gates Foundation. He said he is now impressed that they want to give the money away efficiently, rather than spend heavily on buildings or conferences.

In March, CNBC’s Quick asked Buffett whether he would keep making annual gifts to the Gates Foundation after disclosures about Gates’ connections to Epstein. Buffett said then that he had not made a decision and would wait to see more information.

Buffett told CNBC he has since read a great deal about the issue, including Gates’ congressional testimony. He said Gates made mistakes, but added that he had seen nothing that went beyond mistakes he could imagine making himself in choosing friends or associates.

Buffett also told CNBC that Gates recently visited him in Omaha for a three-hour conversation and that Gates knew about the donation decision before it was announced. In a statement emailed to CNBC by a representative, Gates called Buffett “one of the greatest philanthropists of all time” and said his support had helped save millions of lives.

Alphabet was Buffett’s call

The other surprise was Buffett’s role in Berkshire’s Alphabet stake. CNBC reported that Berkshire’s position in Google’s parent company is now about $30 billion, after earlier purchases and a direct share purchase from Alphabet tied to its plan to fund artificial intelligence spending.

Many Berkshire watchers had read the Alphabet investment as an early sign of Abel’s influence, CNBC reported, because Buffett has long been cautious about technology stocks. Buffett rejected that interpretation, telling CNBC: “I initiated it.”

Buffett added that he does not act without Abel’s approval and said Abel is now “the decider.” He also said Alphabet is spending large amounts on AI infrastructure and that he does not like the stock as much as several other Berkshire holdings. Still, Buffett told CNBC he views Alphabet as more likely to succeed than most investment ideas sold through Wall Street.

Buffett again acknowledged to CNBC that Berkshire should have bought Alphabet earlier. CNBC noted that Buffett said in 2017 he should have recognized Google’s earnings power because Berkshire’s GEICO business was already spending heavily on Google advertising.

Other notes from the interview

Buffett told CNBC he remains satisfied with Berkshire’s Apple stake, even though he is disappointed that Tim Cook is stepping down as CEO. CNBC reported that Apple is Berkshire’s largest stock holding, valued at $76 billion.

Buffett also called Kevin Warsh a “good choice” to lead the Federal Reserve, according to CNBC. The Fed’s job includes targeting 2% inflation and supporting maximum employment.

Buffett repeated his concern that financial markets have become too focused on gambling, CNBC reported. He said it is harder to find value when many market participants prefer speculation, a term investors use for taking risk based more on price movement than business fundamentals.

This story draws on original reporting from CNBC.