Warren Buffett hastily sold $3.7 billion in TSMC shares, panicking investors

It was this rapid and unusual reversal of the legendary investor that caused investor sentiment to panic. This stock also fell up to 4% in the trading session on February 15 after the information was announced.

According to the filing, Berkshire Hathaway Inc. Buffett’s company cut its holdings in TSMC by 86% last quarter. Assuming the sale of shares is done at an average price, this deal will also reach a value of up to $ 3.7 billion.

TSMC shares jumped last November amid reports that billionaire Buffett had purchased $5 billion worth of shares. And the price is still up more than 40% from the low in October.

Tony Huang, vice president of Taishin Securities Investment Advisory Co, said: ” It’s surprising that Berkshire cut its holdings by so much in just one quarter. This is not in line with this business’s practice of long-term investment and successive purchases .”

The chip industry has faced supply disruptions due to Covid-19 in China as well as a drop in demand for electronics amid rising inflation. TSMC cut its spending target by about 10% for 2022, to $36 billion after the administration of President Joe Biden introduced new restrictions to limit China’s access to critical technologies.

The overall landscape of the global semiconductor industry is also changing. As tensions between the US and China increase, many countries are choosing to be proactive in chip supply by promoting businesses to open manufacturing plants in their home countries. Building and enhancing local production capacity comes with the risk of increasing costs.

Late last year seemed like a good time to buy TSMC stock as a value investor. Its P/E hit 10.3x in October, its lowest level since 2015 before climbing to 14x in November. And that’s also a long streak of gains for the Taiwanese (Chinese) chipmaker. .

Amid the global chip industry’s underperformance, TSMC’s stock is still up. Even after announcing a plan to sharply reduce spending as well as lower its quarterly revenue outlook, something that has never happened in the past 4 years.

“ Even though stocks fell on news of Buffett’s sell-off, TSMC’s long-term outlook is still very good,” said Huang of Taishin Securities. Many global investors continue to buy more of this stock as its fundamentals improve as well as its position in the global semiconductor industry.”

TSMC is the world’s largest semiconductor manufacturing company. Founded in 1987, this is the first semiconductor company operating in this field. TSMC is listed on stock exchanges in both Taiwan and the US. Currently, TSMC’s market capitalization is about $550 billion.

Reference: Bloomberg