When Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) released its third-quarter earnings report, we learned that Warren Buffett and his team had quite an active quarter in the stock market. The cost basis of Berkshire’s massive stock portfolio increased by about $9.6 billion, and it appeared that there had been some selling in the portfolio as well.
Well, on Monday afternoon we got a glimpse of what the Oracle of Omaha has been buying and selling with the release of Berkshire’s Form 13F, which institutional money managers are required to file 45 days after the end of each quarter. Here’s a breakdown of the recent moves investors should know about.
Here’s what Buffett and his stock pickers have been buying
We already knew about a couple stock purchases Buffett and his lieutenants made — specifically that they spent more than $2 billion adding to their already large position in Bank of America and invested $720 million in Snowflake’s recent IPO. But the company’s quarterly report indicated that this was just a tiny fraction of Berkshire’s stock buying activity.
With that in mind, here’s a rundown of what stocks Berkshire Hathaway added to its portfolio in the third quarter:
The biggest story on the buying side was the addition of not one but four big pharma stocks. Buffett (or one of his stock pickers) initiated stakes worth nearly $6 billion altogether, including three large and nearly equal-sized positions in AbbVie, Merck, and Bristol Myers.
Aside from this, the initiation of a new position in T-Mobile US is also noteworthy, although a $318 million investment is rather small by Berkshire’s standards. This isn’t totally a surprise — Berkshire reportedly considered a large investment in Sprint (now a part of T-Mobile) in 2017.
In addition to the stocks in the chart above, it’s also worth noting that Berkshire also repurchased more than $9 billion of its own stock during the quarter.
Berkshire also hit the sell button on a few stocks
While Berkshire was an active buyer of stocks in the third quarter, the quarterly report indicated that Buffett and company may have continued to pare back some of their other bank investments and that they may have taken some profits in their largest holding, Apple. Here are the particulars of these moves.
We knew Berkshire sold some Apple, and Berkshire’s SEC filing confirmed it. The same goes for bank stocks, with the Wells Fargo, JPMorgan Chase, and other bank-stock sales adding up to nearly $6 billion.
On the selling side, the biggest surprise is definitely the sale of the company’s entire Costco stake. This likely resulted in a big profit for Berkshire, as Costco stock is trading for about $380 per share right now, roughly 10 times what Berkshire likely paid for it.
Also surprising is that Berkshire sold more than 40% of its Barrick Gold investment, which was just initiated during the second quarter.
An active quarter that shows Berkshire is ready to put money to work
Between Berkshire’s massive buybacks, this quarter’s wave of other stock purchases, and some other investments Berkshire has made recently, it is crystal clear that Warren Buffett is now in capital deployment mode. And with about $140 billion in cash and equivalents still on the balance sheet, this could be just the beginning.
Author: Matthew Frankel, CFP