Warren Buffett’s recent purchases are indirect bullish signals for Fintech, Crypto

Warren Buffett’s famous value investing means that he checks the intrinsic value of a company before buying the shares. The companies that find a place on his screen are the ones that show they can endure.

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His strongest criticism of cryptocurrencies has been that they have no intrinsic value. His observation that crypto does not produce anything held Berkshire Hathaway (BRKB) away from digital banking, crypto firms and NFTs for a long time.

However, that has changed. Buffett’s recent SEC filings show that the highly regarded value investor is opening up to some of these more speculative assets, at least indirectly.

Metaverse is playing

Buffett’s most notable recent purchases that open him up to crypto are Activision Blizzard (ATVI).

The renowned long-term investor bought 14.66 million shares of Activision Blizzard in December 2021 and increased his stake to 64.3 million in March, then to 68.4 million in June. His total ownership is now a whopping 9.5% of the total shares.

Although his first purchase was before Microsoft (MSFT) announced a deal to buy Activision, later purchases were made after the news.

The company, which Microsoft hopes to buy for $68.7 billion, is the largest deal in the software giant’s history and signals Microsoft’s entry into the new metaverse of experiments with virtual experience and digital assets, including digital currencies and NFTs. However, the deal faces antitrust objections in the UK.

Buffett’s stake in digital banking and NFT

Oracle of Omaha bought $1 billion off NU Holdings (NOW) in February. It previously took a $500 million stake in January ahead of the company’s December 2021 IPO.

Buffett rarely takes positions in pre-IPOs or IPOs, usually waiting to see a few quarters and even a few years before weighing in. Two recent exceptions have broken this rule: Snowflake (SNOW) is one and NU Holdings is the other.

Snowflake’s data cloud marketplace is already seeing growth in NFTs. Berkshire Hathaway has held 6.1 million shares of Snowflake since acquiring them in September 2020, when the company went public. SNOW’s revenue in the July quarter increased by 83% to $497 million from the previous year.

Nu Bank, the subsidiary of NU Holdings, offers digital banking and peer-to-peer transfers. NU had its IPO on the New York Stock Exchange in December 2021 and launched NU Pay and NU Crypto in 2022. It also started crypto trading and custody this year.

The fintech added 5.7 million customers last quarter, including 1 million for its crypto platform. Revenue growth of $230% from the prior year after adjusting for currency fluctuations. NU has 1% of the cash in Bitcoin.

Berkshire bought 107 million shares in NU, which was 0.2% of its total portfolio holdings. Visa (V) and MasterCard (MA) holdings amounted to 0.5% and 0.4% at the end of the first quarter.

After NU shares plunged after the IPO, its 107 million shares made up just 0.1% of Buffett’s holdings as of June 30. Even though the stock is down, Buffett continues to hold them all. On the other hand, he sold a few million shares of Visa and Mastercard stock during the same period.

The company also has a position in Brazilian digital payment firms StoneCo (STNE).

Warren Buffett’s Blue Chip Holdings is going digital

In February, Buffett’s largest holding, apple (AAPL), announced that iPhones would support crypto payments through digital wallets. Apple accounted for 41% of Berkshire Hathaway as of June 30.

Amazon.com (AMZN) is already a bedrock for several public blockchains that operate on their own cryptos, including Ethereum.

In August 2021, Coca Cola (KO), one of Warren Buffett’s favorite and long-term holdings, succeeded in its first NFT to support the Special Olympics.

Most of the stocks discussed here, with the exception of NU and SNOW, are trading below their 50-day moving averages.

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