Buffett’s quick $4.9 billion sale of TSMC stock spooks investors
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Warren Buffett slashed his TSMC holding just months after disclosing a major stake, an unusually quick reversal by the legendary stock picker.
PHOTO: REUTERS
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Hong Kong - Billionaire investor Warren Buffett has slashed his holding of Taiwan Semiconductor Manufacturing Co (TSMC) just months after disclosing a major stake,
Mr Buffett’s Berkshire Hathaway cut its holding of TSMC’s American depositary receipts by 86 per cent in the last quarter, according to the latest filing.
Assuming it sold them at the average price over the period, the stake sale would have fetched US$3.7 billion (S$4.9 billion).
Shares of the world’s largest chipmaker closed at NT$525, down 3.27 per cent, in Taipei following the news, amid broad market losses.
TSMC had jumped in November amid news that Mr Buffett had acquired a stake worth about US$5 billion, and it is still up more than 40 per cent from an October low.
“It’s surprising that Berkshire cut its holding so much in just a quarter, which differs from its past practice of long-term investment and continuing to add shares,” said Mr Tony Huang, vice-president at Taishin Securities Investment Advisory.
The chip industry has had to contend with Covid-19-induced supply disruptions in China and a slump in demand for electronics amid surging inflation.
TSMC cut its spending target by about 10 per cent in 2022 to about US$36 billion after the Biden administration slapped new restrictions on China’s access to critical technologies.
There is also a shift in the industry’s economics.
Amid US-China political tensions,
Late 2022 appeared to be a good time to buy TSMC shares as a value investor.
Its forward price-to-earnings ratio hit 10.3 times in October, the lowest since 2015, before bouncing back to nearly 14 times in November, according to data compiled by Bloomberg.
The chipmaker’s stock had rallied amid a rise in global chip shares as investors tried to gauge a bottom. It extended gains in January, even after it announced plans to further cut spending and signalled its first quarterly revenue fall in four years.
While the stock will likely suffer in the near term on news of Mr Buffett’s sell-down, TSMC’s longer-term outlook is still positive, according to Taishin Securities’ Mr Huang.
“Many global investors continue adding its shares with its fundamentals improving, including better utilisation rates and its leadership role in advanced technology,” he said. BLOOMBERG
