Snowflake IPO: Warren Buffett believes this stock is a winner

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Billionaire investor Warren Buffett is well known for acquiring stakes in companies that can deliver long-term value. He has been vocal about avoiding investing in initial public offerings (IPO), which are normally driven by excitement and hype.

In fact, his conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) never bought any new stock offering over the past 55 years.

In an unusual move, Buffett’s Berkshire Hathaway is acquiring a stake in Snowflake, a cloud computing company, which is scheduled to go public next week on the New York Stock Exchange (NYSE) under the ticker SNOW.

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Snowflake disclosed in its regulatory filing that Berkshire Hathaway will acquire $250 million worth of its stock in a private placement, immediately after its IPO.

Warren Buffett is investing $570 million in Snowflake

Additionally, Berkshire Hathaway will purchase $320 million worth of Snowflake shares from a stakeholder in a secondary transaction, bringing its total investment to $570 million.

Its investment is huge. Obviously, Buffett believes Snowflake is a winner—it is capable of generating long-term value to shareholders. Take note that the Oracle of Omaha said you need to have a good reason to buy into new stock offerings.