Warren Buffett's company missed out on a roughly $1.5 billion gain by dumping Costco stock in 2020 (2024)

• Warren Buffett's company missed out on a $1.5 billion gain by selling Costco stock in 2020.
• Berkshire Hathaway cashed out shares for about $1.5 billion that would be worth $3 billion today.
• Buffett has said that selling Costco, which now trades near all-time highs, was probably a mistake.

Warren Buffett missed out on a roughly $1.5 billion gain by dumping Costco stock in the third quarter of 2020.

The famed investor's Berkshire Hathaway surprised many close followers when it suddenly sold the whole position within three months after two decades of ownership. It had grown its stake in the big-box retailer from a split-adjusted 710,000 shares worth $32 million at the end of 1999, to 4.3 million shares valued at $1.3 billion in June 2020, SEC filings show.

Costco stock has soared by somewhere between 88% and 127% to near-record highs since Buffett's exit. Those percentage gains are based on Costco's trading range of $301 to $364 during the period he sold, and its $684 stock price as of Friday's close.

If Berkshire still held all 4.3 million of its Costco shares, they would be worth $3 billion today. It disposed of its entire stake for between $1.3 billion and $1.6 billion, depending on exactly when it sold. Thus, Buffett's conglomerate left at least $1.4 billion, and as much as $1.7 billion, on the table.

Buffett admitted that offloading Costco was a mistake during Berkshire's shareholding meeting in 2021. The world-famous stock picker said that Charlie Munger, his longtime business partner and a Costco fanatic who died last November, only allowed him a handful of missteps, and selling Costco was one of them.

"I used them up between Costco and Apple," Buffett said, adding that Munger "very likely was right in both circ*mstances."

It's worth noting that Buffett may have jettisoned Costco because he wanted to free up cash to buy other assets with greater upside. Indeed, Berkshire purchased nearly $18 billion worth of stocks on a net basis in the same period it sold Costco, filings show. For example, it built stakes worth a combined $6 billion in four pharmaceutical companies, and spent over $2 billion boosting its Bank of America position.

Even if Buffett regrets selling Costco, he won't be kicking himself too hard. Berkshire's stock portfolio is worth over $300 billion, so a $1.5 billion gain would have barely moved the needle. The company is also off to a flying start in 2024 with its stock hitting a record high this week, giving it a market capitalization of about $840 billion.