Why Warren Buffett Thinks Buying Microsoft Stock ‘Would Be a Mistake’

Berkshire Hathaway CEO Warren Buffett and Microsoft founder Bill Gates have known each other 27 years, enjoy playing bridge together and rallying in ping pong at the annual Berkshire Hathaway meeting.

But the billionaires’ friendship has its boundaries: Buffett will never buy Microsoft stock.

“It just would be a mistake for Berkshire to buy Microsoft,” the famous stock picker said at Berkshire Hathaway’s annual meeting Saturday.

Buffett has been notoriously averse to tech stocks for most of his investing career, though in 2016 he stunned shareholders by buying Apple stock, which is now by far Berkshire Hathaway’s largest holding.

Yet Buffett’s resistance to Microsoft (msft) has nothing to do with its business model or industry. Rather, the problem lies with Gates, who joined the Berkshire Hathaway board in 2004, and retired as chairman of Microsoft in 2014.

“If something happened a week later, a month later, in terms of [Microsoft] having better earnings than expected or making an acquisition—anything—both Bill and I would, incorrectly, but would be a target of suggestions and accusations, perhaps even, that somehow he had told me something, or vice versa,” Buffett said at the Berkshire meeting in Omaha.

In other words, Buffett is concerned with avoiding even the slightest perception of insider trading—however false—or anything that could invite such suspicions.

“I try to stay away from a few things just totally because the inference would be drawn that we might have talked, I might have talked to somebody about something,” Buffett added. “There’d be a lot of people who wouldn’t believe us if something good immediately happened after we bought it.”

Of course, Buffett had plenty of opportunities to buy Microsoft stock without any remote appearance of insider trading. Microsoft went public in 1986—more than five years before Buffett even met Gates. So why didn’t the Oracle of Omaha invest back then?

“In the earlier years, it’s very clear—the answer is stupidity,” Buffett admitted.

Now, Microsoft is just one of “a few [companies] that are off the list” of what Berkshire Hathaway (brk-a) is willing to invest in because of ethical conflicts, Buffett said. (He did not name the others in this group.)

“But both that and my stupidity have cost us a lot of money,” he added.

At least it doesn’t seem to be getting in the way of his friendship with Gates.