Buffett’s Late Bloom: Seeds of Value in a Shifting Landscape

The turning of a page, they say, marks a transition. But transitions, in the realm of capital, are rarely clean breaks. Even as the hand passes the tiller at Berkshire Hathaway, a lingering warmth remains, a final tending of the garden before winter fully descends. It is in this autumnal light that we observe the recent allocations – a quiet flurry of activity before the inevitable stillness.

Some $6.4 billion, disbursed across six holdings in the third quarter – a sum that speaks not of bold expansion, but of careful preservation, of seeking shelter from the winds. The filings with the Securities and Exchange Commission reveal a pattern – not a gambler’s reckless abandon, but a gardener’s selective pruning and planting. Six new shoots, nurtured with a practiced hand.

Each chosen, no doubt, for its inherent strength, its capacity to withstand the seasons. But one, perhaps, stands a little taller, catches the light a little more readily. It is not merely a question of financial metrics, but of a certain… resonance.

The Six New Holdings, Observed

The landscape of value is ever-changing. The familiar landmarks – Apple, Bank of America, VeriSign – have been quietly diminished, their yields harvested. A deliberate thinning, perhaps, to make room for new growth. It is a rhythm as old as agriculture itself. For twelve consecutive quarters, the outflow has exceeded the inflow – a testament to the increasing scarcity of truly fertile ground.

Yet, even in a parched season, a discerning eye can find sustenance. These six were deemed worthy of investment.

Alphabet (GOOG +0.72%)(GOOGL +0.65%): A substantial planting of 17.8 million shares.
Chubb (CB +0.22%): An additional 4.3 million shares, reinforcing an existing hedge.
Domino’s Pizza (DPZ +1.61%): 348,000 shares added – a curious choice, perhaps, but one that speaks to an understanding of enduring human needs.
Lamar Advertising: 32,603 shares added – a stake in the visible world, in the constant flow of information.
Lennar: Another 2,007 shares between the homebuilder’s Class A and Class B shares – a bet on the enduring human desire for shelter.
Sirius XM (SIRI +0.63%): 5 million shares added – a gamble on capturing fleeting attention in an age of distraction.

Domino’s Pizza and Sirius XM have received consistent attention over recent seasons – a slow, deliberate nurturing of these particular seedlings.

The third quarter marked the fifth consecutive period of investment in Domino’s – a quiet endorsement of its resilience. While competitors falter, Domino’s continues to flourish, a testament to the enduring appeal of simple comforts. U.S. same-store sales climbed 5.2% – a modest growth, perhaps, but a steady one, like the persistent drip of water carving stone.

Sirius XM faces a formidable challenge – the rising tide of streaming services threatens to engulf it. Yet, it clings to life, drawing sustenance from its ties to the automotive industry. It is a fragile existence, dependent on a constant influx of new subscribers. But its predictable revenue stream, derived from subscriptions rather than fleeting advertisements, offers a measure of stability. And at a forward price-to-earnings ratio below 7, it is a bargain, a weathered tree offering shade in a barren landscape.

Chubb, established as a holding in late 2023, received further attention this quarter. It is a formidable presence in the international insurance market – a vast network of protection against the vagaries of fate. Its scale and expertise allow it to insure complex global ventures, shielding them from the storms that would overwhelm lesser players.

But none of these, in my estimation, possess the singular potential of Alphabet. It is a different breed, a creature of the digital age, and yet, it embodies the same principles of enduring value.

Alphabet: A Seedling Reaching for the Sun

Alphabet stands apart – it is not the typical Berkshire holding. The Oracle of Omaha has historically shunned the volatile world of technology. This purchase, therefore, suggests a shift in perspective, or perhaps, the influence of a younger gardener. Yet, Buffett himself has long admired Alphabet, recognizing its underlying strength. It is a business that aligns with his core principles – a dominant market position, a strong balance sheet, and a clear path to sustainable growth.

Its Google search engine is a perpetual motion machine, generating wealth with effortless grace. The rise of AI chatbots posed a threat, but Alphabet has deftly integrated this new technology into its existing framework, ensuring its continued dominance. It is a testament to the power of adaptation, of embracing change rather than resisting it.

Its AI Overviews have increased user engagement without compromising its ability to monetize search results – a delicate balance, achieved with skill and precision. As a result, Alphabet has seen Google ad revenue accelerate, reaching 15% in the most recent quarter – a healthy growth rate, like the steady expansion of a forest.

This core advertising business has generated free cash flow of $73.5 billion over the trailing twelve months – a remarkable feat, achieved despite heavy investment in data centers for its booming Google Cloud business. It is a testament to the power of scale, of leveraging existing infrastructure to capture new opportunities. Google Cloud revenue is growing at a rate of 30% per quarter – a sign of its increasing dominance in the cloud computing market.

Its backlog is growing even faster, indicating a sustained demand for its services. And its operating margin is improving, reaching 24% last quarter – a sign of increasing efficiency and profitability.

This cash-generating machine, protected by a wide moat, has enabled Alphabet to capitalize on a vast opportunity while returning capital to shareholders through share repurchases and dividends. These are the hallmarks of a great investment – a business that generates wealth, rewards its owners, and endures through the seasons. While the stock no longer trades at the bargain price it fetched in the third quarter, its earnings multiple of 29 remains a fair price to pay for a company of this caliber.

2026-01-23 03:33

The Six New Holdings, Observed

Alphabet: A Seedling Reaching for the Sun

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