The geopolitics of Warren Buffett

Thousands made the annual pilgrimage to the Berkshire Hathaway AGM on Saturday to hear the latest wisdom from the Oracle of Omaha himself, Warren Buffett.

But they got something else: a live announcement that the 94-year-old is retiring.

He's long shrugged off geopolitics, focusing instead on his value investment philosophy (“buy wonderful businesses at fair prices”) — and that makes sense for a guy who bought his first shares as an 11-year-old during WWII, then snowballed his portfolio through wars, famines, pandemics, and beyond into today's $810B holding company.

Still, here are four times geopolitics nonetheless took a close interest in Warren Buffett.

1. 🇹🇼 "I don't like its location, and I've re-evaluated that"

Buffett's preferred shareholding timeframe is famously "forever". And yet, with that line above, the world suddenly learned in 2023 that Buffett was selling his stake in Taiwan's pioneering chipmaker (TSMC), just months after first ploughing $4.1B into it!

Why? Whether you're buying or selling TSMC, it's geopolitical. That's partly due to the 'what': a firm producing the chips in the F-35 fighter jet, the iPhone, Nvidia's AI advances, and 90% of every other advanced chip our world needs. Taiwan calls that dependence the island's 'silicon shield', hoping it’ll make an invasion less likely.

But relatedly in Buffett’s case, his above quote suggests his decision to sell was more about the ‘where’: Taiwan is just 160km (100mi) off the coast of a nuclear-armed power claiming the self-governing island as its own (see our own take on that claim here).

Which takes us to....

2. 🇨🇳 "This guy is a combination of Thomas Edison and Jack Welch"

The above line came from Buffett's late business partner Charlie Munger, and it was about Wang Chuanfu, the CEO of China's leading EV-maker BYD. But Buffett credits Munger's enthusiasm for the guy and his company as instrumental in Berkshire's prescient decision to buy a 10% stake for $230M in 2008, before BYD had even released a single EV!

Since then, Wang's technical and business prowess — combined with China's vast if unlawful subsidies — have made it today’s global giant. But Buffett started selling down his stake from 2022 at a cool 35x profit, noting the EV market was getting competitive.

Meanwhile, he was already pouring cash into...

3. 🇯🇵 “The Japanese thing was simple”

From 2019, Berkshire started investing tens of billions into a handful of massive Japanese 'sogo shosha' (trading houses) like Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.

Why? Classic Buffett reasons: he a) understood these firms (like Berkshire, they're across everyday sectors like energy and agribusiness), b) he liked their management, c) he liked their long-term approach (these firms go back centuries), d) he likes Japan's long-term prospects, and so e) he concluded these firms were undervalued.

As for the one country where Buffett has done the opposite of cheering...?

4. 🇷🇺 "It was really kind of extreme what took place with us"

This quote came from Buffett’s 2006 shareholder meeting, describing his 1987 experience as a major investor and interim chair of Salomon, which had oil interests in Siberia:

"As long as we were drilling, we were welcome. Then when we wanted to start taking the oil out, after our money had been used to drill the holes, they weren't quite as friendly."

Specifically, he said local authorities warned that anyone arriving to retrieve the firm’s equipment would quite simply never return...

Now, Russia is hardly the only economy placing hurdles on investors trying to get their cash out — China and India both have capital controls, for example. But it's interesting to see the world's most famous investor so scarred by this particular tale.