Verizon
Company Overview
Verizon Communications is one of the United States' two largest wireless carriers, along with AT&T. Berkshire established a large Verizon position in 2020 and substantially exited it in 2021 — one of the more notable near-term position changes in modern Berkshire history.
Investment Story
2020: Large position established. Berkshire acquired approximately $8.6 billion of Verizon common shares in Q4 2020, becoming one of the company's largest institutional shareholders. The investment reflected Buffett's view that Verizon's dominant wireless business — providing essential connectivity to roughly 120 million subscribers — combined with a high dividend yield made it attractive at prevailing valuations.
Investment thesis. Verizon generates approximately $20 billion annually in free cash flow from its wireless network — a business with high customer switching costs (termination fees, number portability friction), duopoly competitive structure, and essential-service characteristics. The dividend yield at Berkshire's purchase price was approximately 4.5%.
2021: Full exit. Berkshire sold virtually all its Verizon shares in Q2 2021 — completing a full purchase and exit within two quarters. Buffett did not extensively comment on the exit reasoning. The rapid reversal on a major position is unusual for Berkshire and suggests either a change in competitive assessment (5G capital requirements, cable company wireless competition) or a better capital deployment alternative.
Buffett's Own Words
Verizon Communications Inc. . . . . . . . . . . . . . . . . . 3.5 8,691 8,620 Others** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,458 40,585 Total Equity Investments Carried at Market . . . . . . $ 108,620 $ 281,170 * Excludes shares held by pension funds of Berkshire subsidiaries. ** This is our actual purchase price and also our tax basis. *** Includes a $10 billion investment in Occidental Petroleum, consisting of preferred stock and warrants to buy common stock, a combination now bein*
Verizon Communications Inc. . . . . . . . . . . . . . . . . . . 3.8 9,387 8,253 Others** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,629 39,972 Total Equity Investments Carried at Market . . . . . . . . $ 104,605 $ 350,719 * This is our actual purchase price and also our tax basis. ** Held by BHE; consequently, Berkshire shareholders have only a 91.1% interest in this position. *** Includes a $10 billion investment in Occidental Petroleum, consisting of preferred stock and warrants to bu*
Investment Lessons
Telecommunication moats are more contested than they appear. Verizon's wireless network dominance faces genuine competitive threats: cable companies (Comcast, Charter) have used their existing network infrastructure to offer wireless service at dramatically lower prices, disrupting the industry's pricing dynamics. The capital intensity required to maintain 5G leadership further compresses free cash flow. These factors may explain Berkshire's rapid exit.
Large investments held briefly can still teach important lessons. Berkshire's Verizon experience — buy, then exit quickly — reflects the intellectual honesty to reverse when competitive analysis changes. The willingness to be wrong quickly rather than to defend a position out of commitment to the original thesis (as happened with IBM, though more slowly) is evidence of genuine intellectual flexibility.