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Warren Buffett: I was an "idiot" for not buying Amazon shares sooner

  • Shares of Amazon hit highs of the year after Buffett discloses investment, but said he wasn't the person behind decision.
  • Berkshire Hathaway's CEO calls himself an "idiot" for not buying shares of the online retailer in the past.
  • The investment is another sign of the "changing of the guard" at Berkshire, which holds its annual shareholder meeting Saturday.

Warren Buffett has long voiced his admiration for Amazon, yet it wasn't the "Oracle of Omaha," as the celebrated investor is known, who decided to put Berkshire Hathaway's money where his mouth is. Instead, it was one of his younger deputies who opted to invest in the ecommerce behemoth.

"One of the fellows in the office that manage money ... bought some Amazon," Buffett, Berkshire's chairman and CEO, told CNBC, likely referring to one of two investment managers, Todd Combs or Ted Weschler, at the company.

The distinction is notable, analysts said, in that Buffett has shied away from investing in technology companies, with IBM and then much later, Apple, rare exceptions. "They got into Apple late in the game--from nowhere five years ago to now it's their biggest holding," Cathy Siefert, equity research analyst at CFRA Research, told CBS MoneyWatch. 

Investing in Amazon, whose shares are approaching $2,000 apiece, might seem at odds with Buffett's usual approach of buying stakes in profitable companies that are undervalued by the market. But Meyer Shields, an analyst at Keefe, Bruyette & Woods, said Berkshire's more conventional holdings -- the so-called "value stocks" at the core of Buffett's philosophy -- can likely offset any risk from having a position in Amazon.  

"Kraft Foods, as a strong legacy brand, is vulnerable to strong legacy brands mattering much less than they used to," Shields said. "Amazon is kind of the flip side of that. It benefits from changing tastes because it's an intermediary."

Speaking ahead of Berkshire's annual shareholders meeting on Saturday in Omaha, Nebraska, Buffett also told CNBC he'd been "an idiot for not buying" shares in Amazon in the past. 

His words seemed to lift shares of Amazon, which rose to $1,964.38 in afternoon trading Friday, its high for the year. The stock is up 30 percent in 2019.

Changing of the guard

Buffett's admission also may signify something about Berkshire's future -- namely, the conglomerate's future when Buffett, 88, and longtime partner Charlie Munger, 95, are no longer a part of its present. 

"He said Berkshire Hathaway bought Amazon -- Warren Buffett didn't buy Amazon," Siefert said. "It speaks to what we're seeing at Berkshire, the beginning of the changing of the guard, as Warren and Charlie Munger are getting on in years."

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Combs, who was CEO of a hedge fund before he joined Berkshire in 2010, "is going to be more comfortable in that world," said Meyer, noting that Berkshire has been investing more in the tech sector as the younger men take on more responsibility.

That gradual shift at Berkshire as is a healthy development, Shields said. "Whenever you've got 40,000 fans cheering on a CEO, there is probably less skepticism in the investment base than is appropriate," he added in reference to Berkshire's annual shareholder gathering. "I hope [Buffett] lives forever, but that's probably not a good bet."

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