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Business trends

Buffett leans in to fintech and Asia in search of gems

Paytm and Amazon stakes mark departure from Oracle of Omaha's tech aversion

Warren Buffett, CEO of Berkshire Hathaway, takes a drink of Cherry Coke while playing bridge as part of the company annual meeting weekend in Omaha, Nebraska on May 6.   © Reuters

OMAHA, U.S. -- Is the Oracle of Omaha changing his investment strategy?

Around 40,000 investors, many from China and elsewhere in Asia, gathered at the annual Berkshire Hathaway shareholders meeting in this Nebraska city Saturday to hear from Warren Buffett.

Signs of a shift at the company were apparent before the meeting. Buffett famously avoids investing in fields like technology that are fast moving and difficult to understand. Yet in 2018, Berkshire bought into Paytm, India's largest mobile payments company, and reportedly purchased a stake in Brazilian financial technology concern StoneCo during its initial public offering.

And in an interview Thursday with CNBC, Buffett revealed that Berkshire had bought shares of e-commerce behemoth Amazon.com. These moves followed a massive purchase of Apple stock early in 2018.

On Saturday, the 88-year-old Buffett and longtime friend Charlie Munger, Berkshire's 95-year-old vice chairman, handled the seven-hour meeting with ease and humor. They fielded shareholder questions on topics including Berkshire's management and the looming succession issue, Buffett's investment philosophy, U.S.-China relations and the March crash of a Boeing 737 Max jet.

Kelly Zou, a Buffett acolyte who came from Beijing for the event, said she wanted to ask him about the secrets of long-term investing.

Another attendee, Kunal Shirodkar of Mumbai, said Buffett remained hungry for acquisitions and that he told the crowd Berkshire would pursue further purchases of companies in China and the U.K.

Asked about his China plans, Buffett expressed interest in expanding there.

"It's a big market, and we like big markets," he said. "We've done well in China. We haven't done enough."

The country's prominent fintech companies could make for appealing targets, given Berkshire's recent interest in the field.

Meanwhile, Munger did not mince words on the trade tensions between the U.S. and China.

"Think how stupid it would be if the two countries didn't get along," the vice chairman said.

Munger expressed hope for a speedy resolution to a trade war that has hampered Berkshire's business.

Though Berkshire Hathaway is often perceived as an investment company, it is actually a huge conglomerate that extends to sectors such as insurance, railroads and energy through the businesses it has acquired. Worth over $500 billion, it is counted in the world's top five conglomerates.

Buffett has long been known for purchasing undervalued stocks and waiting for them to rise to their potential over time. He learned the art of value investing from his mentor, Benjamin Graham, the "father of value investing."

The Oracle of Omaha is respected worldwide for his principles, but talk of the "death" of value investing has been heard often among U.S. market players in recent days. Many high-tech stocks are sold with a premium from the outset, with hopes on future growth.

With fewer undervalued stocks remaining, it is becoming difficult -- even for Buffett -- to achieve a significantly higher return than the market average.

Shareholders confronted Buffett with tough questions on Saturday, noting the company's bloated cash flow of $100 billion and its lackluster share price. Buffett's newfound interest in fintech and tech stocks may reflect those pressures.

Leading the charge into fintech are Todd Combs, 48, and Ted Weschler, 56, the younger money managers to whom Buffett has handed over portfolio management.

Though Buffett told shareholders that the investment philosophy has not changed, the expanding roles of next-generation leaders at Berkshire is inevitably bringing about change.

In a rare move, two deputies who were promoted to vice chairmen last year answered questions at the shareholders meeting. Greg Abel, 57, who runs the group's energy business, and Indian-born Ajit Jain, 67, who oversees the insurance business, are considered likely successors to Buffett.

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