Buffett Drew Lessons From IBM as He Entered, Then Exited, Oracle

(Bloomberg) -- Berkshire Hathaway Inc. dipped into Oracle Corp. last year, then quickly sold off the shares. The change of heart was by Warren Buffett himself.

“I’ve followed it from the standpoint of reading about it, but I felt I didn’t understand the business,” Buffett said Monday in an interview on CNBC. “Then after I started buying it, I felt I still don’t understand the business. I actually changed my mind in terms of understanding it.”

Buffett’s Berkshire Hathaway disclosed a $2.1 billion stake in Oracle in the third quarter. By the fourth quarter, that holding had vanished. Recently, Berkshire has been expanding its holdings in technology companies including Apple Inc. after spending years avoiding them due to a lack of understanding. Buffett had been a long-term investor in International Business Machines Corp., but eventually ditched that holding as that company struggled with declining sales.

Buffett used lessons learned from IBM when thinking about Oracle, he said Monday.

“Larry Ellison’s done a fantastic job with Oracle,” Buffett said. “Oracle is a great business, but I don’t think, particularly after my experience with IBM, I don’t think I understand exactly where the cloud is going.”

To contact the reporters on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net;Michelle Kim in New York at mkim651@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub

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