No. of Recommendations: 23
Good to see Berkshire finally buying Google. Many here have been on board for a long time...
Whether it's a position of Mr Buffett or T/T, the slight mystery to me is, why now?
There are always lots of news and narrative developments, both good and bad, so I discount most of those. (LLM on-again-off-again competitive position, antitrust noises, whatever). But at the top level they're basically the same behemoth profit juggernaut that they've been for many years, and has been obvious to all. Didn't Mr Munger call it the biggest moat he'd ever seen? It's easy to say with hindsight that they should have invested way back when, but even avoiding that trope, it's a bit of a puzzler as to why one might pull the trigger now rather than at any time in the past. That $100+ bn/year of net profit is hard to miss, especially the bit about it growing at around 19%/year in the last decade.
One thing can be more or less ruled out: if it's T or T, it isn't an opportunistic trade as they sometimes do, as valuation at the moment seems much closer to top of their cycle than bottom, and the capex drag is coming. So I presume it is intended as a longer term hold.
The reason I note that it's not a particularly good time for a quick trade:
In the last dozen years, for example, price/sales ratios have usually been in the range 4.5 to 9.5, and it's right at the top now. Good entry opportunities have usually been at 6 or lower. The prospects are that net "owner earnings" margins will more likely fall than rise, so it would make sense for a lower number than previously to constitute a particularly good entry.
Jim
