Warren Buffett On Oracle Exit: ‘I Don’t Think I Understand Exactly Where The Cloud Is Going’


Legendary investor Warren Buffett said Monday he doesn't understand the cloud, and that's why his company sold off a more than $2 billion stake in Oracle just a quarter after buying it.

The “Oracle of Omaha” told CNBC that Berkshire Hathaway's exit from Oracle was driven by his confusion around the state of the larger cloud industry, even as he sees the top providers enjoying massive success.

"I've been amazed at what Amazon has done there, and now Microsoft is doing as well. I just don’t know where that game is going," Buffett said.

[Related: ISVs On Oracle: Three SaaS Vendors Explain Why They Chose OCI]

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Omaha, Neb.-based Berkshire Hathaway sold its 41.4 million shares, worth about $2.13 billion, in Oracle stock in the fourth quarter of 2018, according to a 13F filing with the U.S. Securities and Exchange Commission. Berkshire first acquired Oracle shares only in mid-November, the previous quarter—an unusually quick turnaround for a typically tech-shy investor that mostly focuses on longer time frames for its holdings.

"After I started buying it, I felt I still didn't understand the business," Buffett said of Oracle, the Redwood Shores, Calif.-headquartered budding public cloud provider. "I actually changed my mind in terms of understanding it, not in terms of evaluating it."

In the interview, Buffett praised Oracle founder and CTO Larry Ellison, and noted he believes "Oracle is a great business."

But a previous investment in IBM colored his view of holding Oracle for the long haul.

"Particularly after my experience with IBM, I don’t think I understand exactly where the cloud is going," Buffett said.

In 2011, Berkshire bought $10.7 billion of Big Blue at roughly $170 per share. Buffett offloaded most of that position at a loss in 2017.