Warren Buffett‘S Berkshire Hathaway Inc (NYSE: BRK-A) missed an opportunity by selling its shares Costco Wholesale Company COST during 2020.
This move, which ended a long-term investment in the retail giant, resulted in a potential loss of about $1.5 billion in earnings, according to Business Insider.
The shares, sold for an estimated $1.3 billion to $1.6 billion, would be worth about $3 billion in today’s market. This substantial financial miscalculation occurred as Costco’s stock prices rose to near-record levels.
Since Buffett’s departure, the company’s shares have risen between 88% and 127% to near-record highs. Those percentage gains are based on Costco’s trading range of $301 to $364 during the period it sold and its stock price of $684 as of Friday’s close.
Berkshire Hathaway’s journey with Costco began in 1999, starting with a modest investment that expanded to 4.3 million shares by mid-2020.
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Deciding to divest these shares meant missing out on significant appreciation in the value of Costco’s stock after the sale.
Buffett has since said that selling Costco shares was perhaps a misstep, a sentiment he shared at Berkshire’s 2021 shareholder meeting.
“I used them between Costco and Apple,” Business Insider quoted Buffett as saying, adding that the late Charlie Munger, Buffett’s right-hand man, “was most likely right in both circumstances.”
Despite this, Berkshire Hathaway remains a financial powerhouse, boasting an equity portfolio in excess of $300 billion and a market capitalization close to $840 billion.
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This content was partially produced with the help of artificial intelligence tools and was reviewed and published by Benzinga editors.
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