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- Warren Buffett said geopolitical tensions were a factor behind Berkshire Hathaway's unusually quick sale of Taiwan Semiconductor.
- Berkshire Hathaway purchased $4.1 billion of TSMC stock in the third quarter of 2022, but sold nearly 90% of the position a few months later.
- Tensions between China and Taiwan have been building as US political figures visit the island in a show of solidarity.
Warren Buffett did something rather unusual last year when his conglomerate, Berkshire Hathaway, purchased a $4.1 billion stake in Taiwan Semiconductor in the third quarter of 2022.
It wasn't the large purchase that was off character for Buffett, but rather the swift sale of almost 90% of the position, which occurred just a few months later in the fourth quarter.
Buffett has built the bulk of his $110 billion fortune by taking an extremely long-term view on stocks and holding onto some companies for decades. So a holding period of just a few months is out of the ordinary for Buffett.
Now we know why Buffett sold the stake so quickly.
In an interview with Nikkei Asia on Tuesday, Buffett said rising geopolitical tensions between China and Taiwan were "a consideration" in its swift sale of the world's largest chipmaker. China claims Taiwan as its own territory, which Taiwan has denied for decades.
And those tensions — which have been building over the past year as more US political figures visit the island and meet with its leaders in a show of solidarity — just aren't worth the headache for Buffett.
He told Nikkei that Taiwan Semiconductor is a well-managed company, but said that Berkshire Hathaway had better places to invest its money. Berkshire owned just over $600 million in Taiwan Semiconductor as of December 31.
One of those places appears to be the big five Japanese trading houses, which jumped on Tuesday after Buffett added to his stakes in Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. He also said he might invest more in the space.
"These five companies are a cross section of not only Japan but of the world. They are really so much similar to Berkshire," Buffett told Nikkei.