Buffett says he started Berkshire’s Alphabet stake and will end Gates gifts

Warren Buffett told CNBC that Berkshire Hathaway’s roughly $30 billion investment in Alphabet was his idea and that he will stop future donations to the Gates Foundation as he accelerates plans to give away his Berkshire shares. Berkshire shares initially fell after Tuesday’s announcement on the faster giving schedule, then recovered to end the week slightly lower, according to CNBC.

The comments, made in an interview with CNBC’s Becky Quick, addressed two questions closely watched by Berkshire investors: how much influence Buffett retains over capital allocation under new chief executive Greg Abel, and how the chairman is reshaping the disposition of his fortune.

Buffett says Gates decision was driven by family giving plans

Buffett told CNBC that Bill Gates’ links to Jeffrey Epstein were “distasteful” but said they were not the main reason he decided to end future contributions to the Gates Foundation. He said he had reviewed a substantial amount of material, including Gates’ congressional testimony, and concluded that Gates had made mistakes of a kind Buffett could understand in the context of choosing associates.

Buffett said the determining factor was his increased confidence that his three children can responsibly distribute large sums. He told CNBC he did not have the same confidence in 2006, when he began giving Berkshire shares to the Gates Foundation.

Over about 20 years, Buffett donated nearly $48 billion of Berkshire stock to the Gates Foundation, measured at the value of the shares when they were given, CNBC reported. During the same period, he gave almost $18 billion to the Sherwood Foundation, the Howard G. Buffett Foundation, the NoVo Foundation and the Susan Thompson Buffett Foundation.

Buffett is also increasing the number of Berkshire shares he gives away each year. In a Berkshire release cited by CNBC, he said the aim is to dispose of all of his Berkshire shares within about eight years, in part because his children are also getting older. He said Abel’s leadership at Berkshire makes him more comfortable reducing his family’s control sooner.

Gates, in a statement emailed to CNBC by a representative, called Buffett “one of the greatest philanthropists of all time” and said Buffett’s support had helped save millions of lives.

Alphabet purchase came from Buffett, with Abel’s approval

Buffett also told CNBC that he initiated Berkshire’s investment in Alphabet, Google’s parent company. Some observers had viewed the holding as an early sign of Abel’s investment influence because Buffett has generally avoided technology stocks for much of his career.

Berkshire bought about $4.3 billion of Alphabet shares in the third quarter of last year, added $11.5 billion in the first quarter of this year and later purchased another $10 billion directly from Alphabet as part of the company’s plan to raise capital for artificial intelligence spending, CNBC reported.

Buffett said he does not act without Abel’s approval and that Abel is the decision maker, while adding that the two speak frequently. Buffett said Alphabet is spending heavily on AI infrastructure and that he does not like the stock as much as several other Berkshire holdings, but he described Alphabet as more likely to succeed than most securities marketed on Wall Street.

Buffett again said he erred by not buying Alphabet earlier. In a 2017 CNBC interview, he said Berkshire should have recognized Google’s earnings potential because GEICO had been a major advertiser with the company.

Other comments on Apple, the Fed and markets

Buffett told CNBC he remains satisfied with Berkshire’s Apple holding, valued by CNBC at $76 billion, although he expressed disappointment that Tim Cook is stepping down as Apple chief executive.

On monetary policy, Buffett said Kevin Warsh was a “good choice” to chair the Federal Reserve and said Warsh would try to meet the Fed’s mandate of 2% inflation and maximum employment.

Buffett also repeated concerns about speculative trading, telling CNBC that values are harder to find when market participants prefer gambling. Near the end of the interview, he said he had broken a leg a few weeks earlier, without giving further detail.

Separately, Barron’s estimated that Berkshire repurchased between $5 billion and $11 billion of its own stock in the second quarter, based on a Securities and Exchange Commission filing tied to Buffett’s foundation gifts. CNBC noted the exact figure is expected when Berkshire reports second-quarter results early next month.

This story draws on original reporting from CNBC.