Warren Buffett Said Selling Disney 'Was A Huge Mistake': Legendary Investor 'Should Have Been Buying'

Legendary investor Warren Buffett has had plenty of winning stock picks over the years, helping to boost the value of Berkshire Hathaway BRK BRK. The legendary stock picker has also made some mistakes when it comes to buying and selling certain stocks and sectors over the years.

Here's a look back at what Buffett openly calls one of his mistakes.

Buffett Buys Disney Stock: Today, Disney DIS is one of the largest media companies in the world and collects billions of dollars from its theatrical movie releases and sectors like television, theme parks and streaming.

Back in 1966, when Buffett met with Disney co-founder Walt Disney, the company had its Disneyland theme park open in California but had not yet opened its Disney World in Florida, which is today one of the largest theme parks in the world.

Buffett's meeting with Disney is retold through a substack post from popular X poster Trung Phan using a series of lectures from Notre Dame's MBA school.

"I went out to see Walt Disney. We sat down and he told me the whole plan for the company – he couldn't have been a nicer guy," Buffett said.

Buffett invested $4 million in Disney in 1966 thanks to that meeting, taking a 5% stake in Disney. Buffett said Disney probably would have been able to get a valuation of between $300 million and $400 million if they were a private company at the time and gone the venture capitalist route.

The legendary investor has said over the years there were several reasons for his investment in Disney, including the company's intellectual property.

"Mary Poppins had just come out. Mary Poppins made about $30 million that year, and seven years later you're going to show it to kids the same age. It's like having an oil well where all the oil seeps back in."

Buffett said that Disney had around 220 movies at the time including "Snow White," "Three Little Pigs" and "Fantasia. Despite potential value unlock from intellectual property, Disney wrote down the value of past films to $0.

"There were no residual values placed on the value of any Disney picture up through the 1960s."

Buffett also recalled the low valuation of Disney despite having the Disneyland theme park.

"The Pirates of the Caribbean ride had just been put in and it cost $17 million bucks."

Buffett couldn't believe that the company sold at "only 5x rides" at the time.

Despite the strong investment case laid out by Buffett, he sold the Disney stock a year later for $6 million, netting a profit of $2 million and a 50% gain. For Buffett's current long-term holding mentality, the short-term hold might have caused red flags for Disney stock back in 1967.

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Buffett Buys Disney Stock Again: While Buffett sold Disney in 1967, he came back to the media giant years later. Buffett invested in Capital Cities in 1985 to help the media company finance its $3.5 billion acquisition of ABC.

Disney later bought Capital Cities/ABC for $19 billion, a deal that Buffett may have helped facilitate thanks to a meeting between Capital Cities CEO Tom Murphy and Disney CEO Michael Eisner, as recalled in the 1995 Berkshire annual letter.

Thanks to his ownership of Capital Cities stock at the time, Buffett and Berkshire Hathaway got a 3.6% stake in Disney when the merger between the two media companies closed in 1996.

Buffett held onto Disney shares longer this time before mostly selling the position by 2001. This second Disney stake was sold for over $1.5 billion and netted a profit of over 400%, as reported by brk-b.com.

Buffett Admits Disney Sale Was a Mistake: Add up the 5% stake and 3.6% stake and Berkshire Hathaway could own 8.6% of Disney today if they had maintained Buffett's famous quote of "our favorite holding period is forever."

Buffett was asked about the Disney stock sale at the 1998 Berkshire Hathaway annual shareholders meeting by an audience member.

The legendary investor recalled that many stocks he has sold have gone up since he exited, including the first stock he ever bought.

"Certainly the Disney sale in the ‘60s was a huge mistake. I should have been buying, forget about holding, and that happened many times," Buffett said.

Buffett said that sometimes he sells stock in one company to buy stock in another, but this doesn't mean that the company he sold stock in is a bad investment.

"I must say that selling the Disney was a mistake."

At the time of writing, Disney shares trade at $112.55 with a market capitalization of 203.8 billion. Buffett's original 5% stake in Disney would be worth around $10.19 billion and his combined 8.6% hypothetical stake would be worth $17.53 billion.

If Buffett had held all his Disney shares, the media company would be his fifth largest stock holding today, trailing only Apple ($77.7 billion), American Express ($46.1 billion), Bank of America ($34.1 billion) and Coca-Cola ($25.0 billion).

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