Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday closed sharply higher, despite Berkshire Hathaway Inc announcing overnight that it had cut its holdings in the chipmaker to zero.
TSMC rose 1.92 percent to close at NT$505 on the Taiwan Stock Exchange, while the TAIEX closed up 198.85 points, or 1.28 percent, at 15,673.90, led by the bellwether electronics sector.
“Berkshire’s move to cut its holdings in TSMC to zero was widely anticipated after the investment firm sharply lowered its holdings in the company in the fourth quarter of last year,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
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In a 13F filing, which discloses investment firms’ portfolios, with the US Securities and Exchange Commission on Monday, Berkshire said it had offloaded the remaining TSMC shares it owned.
A previous filing in February showed that Berkshire had cut its holdings in TSMC’s American depositary receipts (ADRs) by 86 percent from the third quarter of last year to about 8.3 million units in the fourth quarter.
The disposal of the large chunk of ADRs caught observers off guard because Berkshire chairman Warren Buffett has been considered a long-term investor.
In an annual general meeting held by Berkshire Hathaway early this month, Buffet said that he sold his TSMC holdings because of concerns over geopolitical risks.
“Taiwan Semiconductor is one of the best-managed companies and important companies in the world, and you’ll be able to say the same thing five, 10 or 20 years from now,” Buffett said. “I don’t like its location and re-evaluated that.”
He said there was nobody in the chip industry in TSMC’s league and called it a “marvelous company” with “marvelous people,” but said he would rather find the same kind of company in the US.
“I feel better about the capital that we’ve got deployed in Japan than in Taiwan,” he said. “I wish it weren’t so, but I think that’s the reality.”
Huang said that geopolitical concerns do not dictate the strategies of every institutional investor and that many primarily consider a company’s fundamentals.
“For me, the real concerns are whether TSMC’s sales will rebound in the third quarter as the market expects,” he said.
TSMC said at an investor conference last month that its revenue would fall 1 to 6 percent from a year earlier in US dollar terms, a downgrade from an estimate in January of “a slight increase” because of greater caution over the market outlook for this year.
International business wires reported that foreign institutional investors such as Macquarie Capital Ltd, Fidelity Investments Inc, Tiger Global Management LLC and Coatue Management LLC have raised their holdings in the Taiwanese chipmaker.
Macquarie added about 78 million units of TSMC ADRs to increase its holdings in the first quarter to about US$7.3 billion, while Fidelity bought 14.1 million new TSMC ADRs, increasing its investment in the chipmaker to almost US$4 billion, the reports said.
Tiger Global acquired US$147.8 million of TSMC ADRs in the first quarter, while Coatue built a new position in the chipmaker, buying 5.9 million shares for US$548.9 million, the reports said.
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