There are very few parallels in Warren Buffett’s investing career that can match the amount of cash that he has put forward to buy an ownership stake in a publicly traded stock. With Berkshire’s American Express and Coca-Cola stake, valued at $15 billion and $18 billion respectively, Buffett only put a little over $1 billion into each–the economic value of the investments became enormous because because they compounded at a nice clip over the past three decades. Berkshire’s $11 billion investment in Wells Fargo, worth around $30 billion today, is the largest amount of initial capital dedicated to an investment out of any current Berkshire holding.
Reading the data points of Alphabet’s earnings report a few days ago was like reading through a summary of Rogers Hornsby’s 1922 Triple Crown season with the St. Louis Cardinals when he led the National League with a .401 batting average, hit 42 home runs, clocked 152 RBIs, and led the league in doubles, runs scored, and on-base percentage to boot. Alphabet, the parent company of Google, turned in an earnings report of similar quality, headlined by revenue growth of 22%.
There seems to be minimal dissent that Alphabet is one of the dominant businesses in the world today. It has 24.5% earnings per share growth over the past decade. It’s the verb we use when looking up information online. It is so powerful Europe fines the company for this, that, or the other on a regular basis. It is sitting on over $100 billion in cash, enabling it to buy a seat at the table of all conceivable future tech business activities. The net profit margin of 24.4% is on par with that of Coca-Cola’s 26%.