Why Warren Buffett Dumped AT&T
Berkshire Hathaway unloaded its entire AT&T stake during the first quarter, and the reason is quite simple.
In a nutshell, AT&T is a completely different investment than DirecTV was. The company was a dominant player in satellite television with only one serious competitor DISH Network -- which is much smaller, plus DirecTV operated at significantly better margins. Buffett loves companies with a wide economic moat like this. The company also had strong growth potential, especially in Latin American countries.
In contrast, AT&T isn't a high-potential company. The growth opportunities in AT&T's core businesses are rather limited, and in fact, some of the company's business is declining. During the first quarter alone, AT&T lost 54,000 video customers after factoring in the 328,000 new DirecTV subscribers, and also lost 363,000 postpaid wireless subscribers. In fairness, these two numbers don't tell the full story of AT&T's quarter, but numbers like this are a cause for concern -- especially to growth-seeking investors