On Aug. 14, Warren Buffett's conglomerate Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) released its updated stock holdings for the second quarter of 2024. The biggest headline-grabbing moves were that it sold all of its shares of Snowflake (NYSE: SNOW) and started a roughly $260 million position in Ulta Beauty (NASDAQ: ULTA). But both of these moves make perfect sense for Berkshire.

To be clear, Berkshire Hathaway has plenty of money -- it had $277 billion as of its latest report. In short, it can buy virtually anything it wants; it didn't have to sell one stock to buy another. But allow me to explain how Buffett thinks about investing and why it consequently makes perfect sense for him to swap out Snowflake for Ulta Beauty in Berkshire's portfolio now.

Berkshire Hathaway invested in Snowflake stock during its 2020 initial public offering (IPO), which may be the only time it bought an IPO stock. However, one of Buffett's proteges Todd Combs was a Snowflake customer at Geico and was conversing with Snowflake's former CEO Frank Slootman.

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Source Fool.com