{"id":58295,"date":"2023-03-01T11:24:52","date_gmt":"2023-03-01T16:24:52","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58295"},"modified":"2023-03-01T13:28:02","modified_gmt":"2023-03-01T18:28:02","slug":"why-warren-buffett-just-made-a-huge-mistake","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/","title":{"rendered":"Why Warren Buffett Just Made a Huge Mistake"},"content":{"rendered":"<p><em>Editor\u2019s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we\u2019re going to pick one of those stocks and use <em>Magnifi Personal<\/em> to compare it with its peers or competitors. Here we go\u2026<\/em><\/p>\n<hr \/>\n<p>Sometime in the third quarter of last year, legendary investor Warren Buffett\u2019s Berkshire Hathaway Inc. (BRK-A) took a $4 billion stake in Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), the Taiwanese contract chipmaker.<\/p>\n<p>With TSM being the world\u2019s largest and most valuable semiconductor fabricator with chips in most high-tech equipment the world over, and with Warren Buffett\u2019s reputation for making extremely savvy investments, lots of people took notice.<\/p>\n<p>But just a few months later, Buffett seems to have said \u201cnever mind\u201d and sold more than 85% of his stake.<\/p>\n<p>We have no insight into Buffett\u2019s thinking, but it does seem odd for a buy-and-hold value investor to sell a great company that is so cheap. TSM is a well-run business with wide competitive moats and big profits. Yet, the stock is at a discount to its peers, at 17 times forward earnings. <\/p>\n<div class='mailmunch-forms-widget-1089215'><\/div>\n<p>By comparison, its rival Intel Corp. (INTC) \u2014 thanks to its crashing profits \u2014 has a price-to-earnings ratio (p\/e) in excess of 60 times. And the company just slashed its dividend.<\/p>\n<p>So, we thought it would be interesting to compare TSM to INTC using the <em>Magnifi Personal<\/em> compare function. Comparing two or more stocks has never been easier than with <em>Magnifi Personal<\/em>. All you had to do was type <a href=\"https:\/\/magnifi.com\/?login=true&mentor_drawer_state=%7B%22open%22:true,%22meta%22:%7B%22q%22:%22Compare%20TSM%20and%20INTC%22%7D,%22type%22:%22CHAT%22%7D&utm_source=mc-referral&utm_campaign=INO&utm_ad_type=link&utm_content=weeklymatchup\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">\u201cCompare TSM and INTC\u201d<\/a> and <em>Magnifi Personal<\/em> showed us this:<\/p>\n<p><a href=\"https:\/\/magnifi.com\/?login=true&mentor_drawer_state=%7B%22open%22:true,%22meta%22:%7B%22q%22:%22Compare%20TSM%20and%20INTC%22%7D,%22type%22:%22CHAT%22%7D&utm_source=mc-referral&utm_campaign=INO&utm_ad_type=link&utm_content=weeklymatchup\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/assets.ino.com\/img\/sites\/ino\/email\/13950.jpg\" width=\"650\" height=\"auto\" alt=\"Compare TSM and INTC\" class=\"aligncenter size-medium\" \/><\/a> <\/p>\n<p><em>This is an example of a response using Magnifi Personal. This image is not a recommendation or individual advice. Please see bottom disclaimer for additional information, including INO.com\u2019s relationship with Magnifi.<\/em><!--more--><\/p>\n<p>With access to <em>Magnifi Personal<\/em>, you can do the same! Just <a href=\"https:\/\/magnifi.com\/magnifi-personal\/ino90?utm_medium=affiliate&utm_source=mc-referral&utm_content=\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">click here to get started<\/a> on this comparison, ask <em>Magnifi Personal<\/em> for more details to dig in deeper, or start your own comparison.<\/p>\n<p>As you can see, <em>Magnifi Personal<\/em> has Taiwan Semiconductor as the clear favorite with higher returns and lower volatility.<\/p>\n<p>But Warren Buffett is a value investor, so let\u2019s ask <em>Magnifi Personal<\/em> to compare the two chip stocks based on valuation instead. You can click \u201cComparison Parameters\u201d up in the corner and pick the criteria, or simply ask <em>Magnifi Personal<\/em> to <a href=\"https:\/\/magnifi.com\/?login=true&mentor_drawer_state=%7B%22open%22:true,%22meta%22:%7B%22q%22:%22Compare%20TSM%20and%20INTC%20including%20returns,%20P\/E%20Ratio%20and%20EBITDA%22%7D,%22type%22:%22CHAT%22%7D&utm_source=mc-referral&utm_campaign=INO&utm_ad_type=link&utm_content=mentormatchup\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">\u201cCompare TSM and INTC including returns, P\/E Ratio and EBITDA.\u201d<\/a> Here are the results:<\/p>\n<p><a href=\"https:\/\/magnifi.com\/?login=true&mentor_drawer_state=%7B%22open%22:true,%22meta%22:%7B%22q%22:%22Compare%20TSM%20and%20INTC%20including%20returns,%20P\/E%20Ratio%20and%20EBITDA%22%7D,%22type%22:%22CHAT%22%7D&utm_source=mc-referral&utm_campaign=INO&utm_ad_type=link&utm_content=mentormatchup\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/assets.ino.com\/img\/sites\/ino\/email\/13951.jpg\" width=\"650\" height=\"auto\" alt=\"Compare TSM and INTC\" class=\"aligncenter size-medium\" \/><\/a> <\/p>\n<p>On valuation, TSM still comes out as the clear winner. And keep in mind that Intel\u2019s future looks even worse with, as we mentioned earlier, its earnings plunging.<\/p>\n<p>Keep in mind, too, that TSM is outperforming the broader sector this year. <\/p>\n<p>Mark Baribeau, a portfolio manager at Jennison Associates, told the Financial Times that the company is among the best-positioned semiconductor companies for weathering storms in the industry over the next year or two. <\/p>\n<p>Poor Intel, in the meanwhile, had to recently admit that its tools are operating at only 20% to 25% of the efficiency of equivalent tools at Taiwan Semiconductor.<\/p>\n<p>That technology edge gives TSM pricing power over its customers, even during a semiconductor bust. We expect the company will still pass higher costs through to its customers in 2023, via a 3%-to-6% price hike.<\/p>\n<div class='mailmunch-forms-widget-1089216'><\/div>\n<p>As much today as when Buffett first bought the stock, TSM enjoys durable advantages, pricing power, and a history of good management. Its valuation remains cheap, too.<\/p>\n<p>It\u2019s something that\u2019s very easy to visualize using <em>Magnifi Personal<\/em>, as you\u2019ve seen. <\/p>\n<p>Instead of poring over financial statements and earnings reports, you can simply ask <em>Magnifi Personal<\/em> to compare stocks based on their valuation. <\/p>\n<p>To do that yourself, or compare different stocks and even buy them right in the app, <a href=\"https:\/\/magnifi.com\/magnifi-personal\/ino90?utm_medium=affiliate&utm_source=mc-referral&utm_content=\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">click here<\/a>. It\u2019s all available to you right now. Just <a href=\"https:\/\/magnifi.com\/magnifi-personal\/ino90?utm_medium=affiliate&utm_source=mc-referral&utm_content=\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">click here<\/a> to open your <em>Magnifi Personal<\/em> account right now! <\/p>\n<p><a href=\"https:\/\/magnifi.com\/learn\/?utm_medium=affiliate&utm_source=mc-referral&utm_campaign=INO&utm_ad_type=email&utm_goal=mentor&utm_content=iapremiumdigestsotw&utm_date=\" target=\"_blank\" rel=\"noopener\" style=\"font-weight: bold;\">Latest from Magnifi Learn<\/a>: Your money goals are unique to your life and can change over time. Learn how to choose your investing goals, find common goals to choose from, and learn the best ways to approach goal-based investing in the short- and long-term.<\/p>\n<hr \/>\n<p><span style=\"font-size: 12px; font-style: italic;\">INO.com, a division of TIFIN Group LLC, is affiliated with Magnifi via common ownership. INO.com will receive cash compensation for referrals of clients who open accounts with Magnifi.<\/span><\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">Magnifi LLC does not charge advisory fees or transaction fees for non-managed accounts. Clients who elect to have Magnifi LLC manage all or a portion of their account will be charged an advisory fee. Magnifi LLC receives compensation from product sponsors related to recommendations. Other fees and charges may apply.<\/span><\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.<\/span><\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\"><b>Mutual Funds and Exchange Traded Funds (ETFs) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.<\/b><\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Editor\u2019s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we\u2019re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go\u2026 Sometime in the third [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":56384,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32022,32024,32025,32023,1116],"class_list":["post-58295","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-berkshire-hathaway-inc-brk-a","tag-intel-corp-intc","tag-magnifi-personal","tag-taiwan-semiconductor-manufacturing-co-ltd-tsm","tag-warren-buffett"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Warren Buffett Just Made a Huge Mistake - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"We thought it would be interesting to compare TSM and INTC using the Magnifi Personal compare function - Try it Free!\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Warren Buffett Just Made a Huge Mistake - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"We thought it would be interesting to compare TSM and INTC using the Magnifi Personal compare function - Try it Free!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/\" \/>\n<meta property=\"og:site_name\" content=\"INO.com Trader&#039;s Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/inocom\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-01T16:24:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-01T18:28:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2022\/02\/DarkBlueChart_Full.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"628\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"The INO.com Team\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The INO.com Team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/\"},\"author\":{\"name\":\"The INO.com Team\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/d86a8cce826b7bd105200d88bb28a280\"},\"headline\":\"Why Warren Buffett Just Made a Huge Mistake\",\"datePublished\":\"2023-03-01T16:24:52+00:00\",\"dateModified\":\"2023-03-01T18:28:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/\"},\"wordCount\":868,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/03\/why-warren-buffett-just-made-a-huge-mistake\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/wwwtest.ino.com\/blog\/wp-content\/uploads\/2022\/02\/DarkBlueChart_Full.jpg\",\"keywords\":[\"Berkshire Hathaway Inc. 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