|Berkshire’s secret stocks aren’t secret anymore|
Apple – Chevron – Verizon – Merck- Barrick Gold -Kroger – GM
|The Securities and Exchange Commission requires institutional investment managers with at least $100 million in assets under management to file a Form 13F every three months, listing the publicly-traded U.S. stocks in their portfolio.|
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That’s the primary way we get a rough idea of what Berkshire Hathaway is buying and selling.
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Sometimes, however, the SEC will allow some holdings to be kept confidential for a time, to prevent copycat buyers from driving up a stock’s price as it’s being accumulated.
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That’s what we saw in Berkshire’s Q3 filing: “Confidential information has been omitted from the public Form 13F report and filed separately with the U.S. Securities and Exchange Commission”.
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This week, when Berkshire released its Q4 filing, the secret was revealed. And it’s wasn’t just one stock, it was three.
|Two of them are sizable stakes, even by Berkshire standards, going right into our list of the company’s ten largest holdings of U.S. stocks.As of December 31, Berkshire held 146.7 million shares of Verizon Communications, about 3.5% of that company’s outstanding shares.Sixty percent of the shares were purchased during the fourth quarter.At today’s closing price, the stake is worth $8.3 billion. (It was $8.6 billion at the end of the quarter.)|
Combined with Berkshire’s much smaller $630 million worth of T-Mobile (it did more than double its stake during the fourth quarter), the Verizon position may be a bet on the emerging 5G wireless technology, a strategy endorsed by former Cisco CEO John Chambers in an interview with Yahoo Finance.
The other big confidential purchase was Chevron. Berkshire bought 48.5 million shares (91% of them during the third quarter) that are currently worth $4.6 billion. (As of December 31, it was $4.1 billion.) That’s 2.5% of the oil giant’s outstanding shares.
As CNN Business puts it, buying Chevron stock “is a bet that oil demand will fully recover from Covid-19 and remain elevated for decades to come, despite growing public pressure” on oil companies due to climate change concerns. The Motley Fool’s Eric Volkman notes that’s “entirely in character for Buffett, who throughout his career has pounced on individual stocks and sectors that have fallen out of favor with investors.”And it’s another “sign of confidence” in an energy sector revival, following Berkshire’s $4 billion July purchase of Dominion Energy’s natural gas assets.
On the other hand, Berkshire cut its Suncor Energy stake by almost 28%. But at less than $250 million, it was already relatively small. Secret three is also smallBerkshire revealed it bought 4.3 million shares of professional services company Marsh & McLennan, that are currently worth almost $500 million. Eighty percent of them were purchased during the third quarter. And then there’s …The banks: Berkshire completely closed its already shrunken positions in JPMorgan Chase and PNC Financial.
Its Wells Fargo stake is now down to just 52.4 million shares, a 59% cut from the end of Q3, and a bit more than one-tenth of the shares it held four years ago. It also trimmed its US Bancorp stake by less than 1%. But Berkshire hasn’t soured completely on the sector. It’s second-largest position remains Bank of America at almost $36 billion.Apple: Berkshire’s biggest position ($118 billion) was cut by 57.2 million shares, around 6% of the stake. They would have been worth $7.6 billion at the end of Q4 and $7.4 billion today.
Drug stocks: Berkshire’s Merck position increased by 28% to 28.7 million shares, now worth $2.1 billion, and it added 11% to its Bristol-Meyers Squibb holdings, which are now valued at $2.0 billion. But it completely sold out of a Pfizer position that would be worth just $127 million today.
Gold: The Barrick Gold position ($227 million at today’s close), which had some people mistakenly thinking in August that Buffett had suddenly dropped his longtime distaste for gold as an investment, is completely gone.General Motors: The stake was reduced by 9.4% during the fourth quarter, but thanks to the stock’s rally the value of Berkshire’s holdings still increased by 58% since the end of Q3 and is now worth $3.8 billion.The rest: Berkshire’s Kroger stake increased by 34%, Abbvie was up 20%, and RH (formerly Restoration Hardware) edged up 1.4%.
But does it mean anything?
Bloomberg Opinion’s Tara Lachapelle writes Berkshire’s investing activity was “all over the place” during the fourth quarter, making it hard to know what Buffett and his portfolio managers might be thinking. And on CNBC’s “Fast Money Halftime Report” today, Berkshire shareholder Josh Brown made the case that Berkshire’s stock moves now are “less worth paying attention to than maybe ever before in my lifetime” for most investors, with no “fundamental takeaways on individual companies” or “sector bets.”
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