Get All Access for $5/mo

Warren Buffett Recently Invested in Amazon. It Made Him Nearly $250 Million Before. Buffett called himself 'an idiot for not buying' Amazon shares before.

By Theron Mohamed

This story originally appeared on Business Insider

Kevin Lamarque/Reuters via BI

Warren Buffett on Thursday evening revealed to CNBC that his Berkshire Hathaway conglomerate has taken a stake in Amazon. The legendary investor will hope lightning strikes twice: he made a massive $246 million -- an 84% return in five years -- on a previous investment in the e-commerce titan.

Buffett called himself "an idiot for not buying" Amazon shares before. He joked there were "no personality changes taking place" as one of Berkshire Hathaway's investment managers purchased the stock.

The Sage of Omaha shouldn't be so hard on himself. After the dot-com bubble burst, Berkshire Hathaway made "sensible investments" in junk bonds and loans, growing its holdings six-fold to $8.3 billion, Buffett wrote in his 2002 letter to shareholders. The company amassed 310 million euros worth of Amazon bonds in 2001 and 2002 that were "priced as 'junk' credits, though they were anything but," Buffett said in his 2007 letter to shareholders.

Buffett's investment was helped by the euro, which strengthened from $0.95 at the time of purchase in 2002 to $1.47 in 2007. Its rise against the dollar meant he received a hefty $253 million when Amazon paid off some of the bonds in 2005 and 2006, and the remainder were valued at $162 million at the end of 2007. His overall gain -- realized and unrealized -- was $246 million at the end of 2007, representing an 84% return on his investment. Almost half of that stemmed from the falling dollar.

Buffett will be looking for a much bigger payout from his latest Amazon investment, without relying on currency movements. Berkshire Hathaway's 5.3% stake in Apple alone is worth about $51 billion, and together its investment holdings returned $3.8 billion in dividends last year, according to its latest annual report. Shareholders could gain more insight into Buffett's thinking when he speaks at the company's annual shareholder meeting this weekend.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Leadership

3 Steps to Overcoming Organizational Fear of Change

It's a leader's job to ensure everyone in the company can own their expertise without fear — even when left to their own devices.

Business News

SoftBank CEO Says AI 10x Smarter Than Humans Could Be Here in a Matter of Years

SoftBank CEO Masayoshi Son spoke to shareholders during the company's general meeting on Friday.

Business News

Amazon Is Thinking About Charging Extra for AI Alexa

"Hey Alexa, how much are you going to cost?"

Side Hustle

Top Secrets to Starting a 6-Figure Etsy Side Hustle That Earns Passive Income, According to 3 People Who Did It

Etsy remains a popular ecommerce platfrom for sellers — and can be incredibly lucrative for those who know how to use it.

Business News

Olive Garden Is Planning to Increase Prices at a 'More Consistent' Rate Due to Inflation

The fast-casual chain saw a slight decrease in same-store sales during fiscal Q4 2024.