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| image source: cnbc |
Get ready to dive into the thrilling world of stock market moves! One of the most eagerly awaited quarterly filings is none other than Warren Buffett’s Berkshire Hathaway Inc. (ticker: BRK.A, BRK.B), a colossal company valued at a whopping $712 billion.
Now, let’s uncover the top 10 significant changes that the legendary Oracle of Omaha made to Berkshire’s portfolio in the first quarter. Brace yourself for some captivating insights into the mind of one of the world’s greatest investors.
Sold: Chevron Corp. (CVX)
Warren Buffett made his first investment in this big American oil company during the last part of 2020. However, he decided to sell some of his Chevron shares in the first and second quarters of 2021.
Something unexpected happened next. There was a worldwide energy crisis, and Russia’s invasion of Ukraine caused the price of crude oil to rise very high, reaching its highest point in 13 years in 2022. Because of this, Buffett changed his mind and started buying more Chevron shares in the first three quarters of 2022.
But guess what? Buffett made another change. In the last part of 2022, he sold 2.3 million Chevron shares. Then, in the first part of 2023, he sold a massive 30.5 million more shares. Even though he sold some, Berkshire Hathaway, Buffett’s company, still has 132.4 million Chevron shares. Those shares are currently worth about $20.8 billion as of the market’s closing on May 15. It’s been quite a journey for Buffett and Chevron!
Bought: Apple Inc. (AAPL)
In the first quarter, Warren Buffett didn’t hold back when it came to Apple! He added an additional 20.4 million shares to his already massive stake in the company. Now, his total investment in Apple amounts to a mind-boggling 915.5 million shares, which are valued at a staggering $157.5 billion.
Buffett’s journey with Apple started back in the first quarter of 2016, when he first invested in the company. Today, Berkshire Hathaway’s stake in Apple is more than five times larger than any of its other public stock holdings. In fact, Apple represents a whopping 46.4% of Berkshire’s entire portfolio.
It’s clear that Buffett hit a home run with Apple, as the stock has performed exceptionally well in 2023. Since the beginning of 2016, Apple has generated a total return of an impressive 616.4%. This investment has undoubtedly been a phenomenal success for Warren Buffett and Berkshire Hathaway.
Sold: Bank of New York Mellon Corp. (BK)
Bank of New York Mellon, a trust bank with various financial services, plays a crucial role in managing cash for large investment funds, providing funding for corporations, and acting as a fixed-income clearing firm. The bank primarily earns income through transaction fees.
Warren Buffett initially invested in BK stock during the third quarter of 2010. However, in the first quarter of the following year, he sold off the remaining 25 million shares of his stake. This decision came after aggressively reducing his holdings in the previous two quarters.
Unfortunately, Bank of New York Mellon’s stock performance over the more than 12 years Buffett held it did not fare well compared to the broader market. The total return on BK stock significantly lagged behind the performance of the S&P 500.
Bought: Occidental Petroleum Corp. (OXY)
Occidental Petroleum, one of the most prominent oil and gas companies in the United States, has witnessed impressive growth in the oil and gas sector since the beginning of 2022. Warren Buffett has been a shareholder in Occidental since Berkshire Hathaway provided financial support for Occidental’s acquisition of Anadarko Petroleum, a transaction worth $38 billion, back in 2019.
Berkshire Hathaway’s stake in Occidental has flourished, reaching more than 211.7 million shares valued at around $12.4 billion. This makes Occidental Petroleum (OXY) one of Buffett’s six largest stock holdings. Additionally, Berkshire also holds 83.9 million warrants, which can be exchanged for Occidental common stock at a price of $59.62 per share.
With such substantial investments and a strong presence in Occidental, it is evident that Warren Buffett sees potential in the company and its prospects within the oil and gas industry.
Bought: Capital One Financial Corp. (COF)
Capital One Financial, a significant player in the financial services sector, operates as a diversified holding company. It offers a wide range of banking products for both consumers and businesses and holds a prominent position as one of the largest credit card issuers. While Warren Buffett already has substantial investments in companies like Visa Inc. (V), Mastercard Inc. (MA), and American Express Co. (AXP), his new stake in Capital One doesn’t come as a complete surprise.
Buffett’s decision to invest in Capital One may stem from multiple factors. Firstly, he could view the current weakness in the financial sector, particularly related to the regional banking crisis, as an opportunity to make strategic purchases. Additionally, the stock’s appealing forward earnings multiple of 6.3 might have attracted Buffett’s attention. This suggests that Capital One’s stock is relatively undervalued compared to its expected future earnings.
In the first quarter, Berkshire Hathaway actively acquired 9.9 million shares of Capital One Financial (COF) stock, amounting to a value of approximately $884.2 million. This move indicates Buffett’s confidence in the company’s prospects and aligns with his investment philosophy of identifying undervalued assets with growth potential.
Sold: RH (RH)
Warren Buffett initially invested in RH, the high-end home furnishings company, during the third quarter of 2019. However, in a surprising move, he sold his entire stake in RH during the first quarter.
Formerly known as Restoration Hardware, RH has undergone a rebranding process and positioned itself as a “lifestyle” company with a significant focus on online sales. Unfortunately, RH experienced a decline in both revenue and net income in 2022 compared to the previous year. Additionally, the stock has witnessed a 5.4% drop in value over the past 12 months.
While RH faced some challenges, there was a potential opportunity to buy the stock at a lower price. However, Buffett chose to sell his entire 2.3 million-share stake instead of capitalizing on the market dip. It’s worth noting that Buffett missed out on selling his stake at the stock’s peak in 2021.
This decision showcases the complexity and unpredictability of investing, even for seasoned investors like Warren Buffett.
Sold: Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Warren Buffett’s change of heart regarding Taiwan Semiconductor Manufacturing (TSM) has been one of his most significant reversals in recent quarters. In a surprising move, Buffett made a bold statement in the third quarter of 2022 by acquiring a substantial stake in TSM worth $4.1 billion. This investment immediately propelled TSM into one of Berkshire Hathaway’s top 10 holdings.
However, the tides quickly turned. Just one quarter later, Buffett shocked Wall Street once again by selling over 51.7 million shares of TSM stock in the fourth quarter. To add to the surprise, in the first quarter of the following year, Buffett divested Berkshire’s remaining 8.3 million shares of TSM.
It is evident that something significant changed Buffett’s perspective on the semiconductor foundry. This news has come as a major disappointment for other investors in Taiwan Semiconductor, who had hoped for continued support from Buffett. The exact reasons behind Buffett’s decision remain undisclosed, leaving the market speculating about the factors that influenced his change of mind.
Bought: Bank of America Corp. (BAC)
Warren Buffett’s investment journey with Bank of America started in 2011, a period marked by the European debt crisis. Despite reducing his exposure to some bank stocks in recent quarters, Buffett’s faith in banks remains strong. Bank of America, however, stands out as an exception to this trend.
In the first quarter, Buffett made a notable move by purchasing an additional 22.7 million shares of Bank of America (BAC) stock. This increased his total stake to a significant 1.03 billion shares, representing a 12.9% ownership stake in the company. With a position valued at $28.6 billion, Bank of America holds the distinction of being the second-largest stock holding in Berkshire Hathaway’s portfolio, only surpassed by Apple.
Buffett’s continued investment in Bank of America reflects his confidence in the company’s prospects and the banking sector as a whole. Despite adjustments in his overall bank holdings, Bank of America retains a prominent position in Buffett’s investment strategy and serves as a key pillar in Berkshire Hathaway’s portfolio.
Sold: U.S. Bancorp (USB)
Warren Buffett’s decision to exit his position in U.S. Bancorp during the first quarter did not come as a surprise to long-time followers of his investment strategies. It followed Berkshire Hathaway’s earlier sale of its remaining shares in Wells Fargo & Co. (WFC) in the same quarter, marking the end of a more than 20-year holding period for that stock. As a result, U.S. Bancorp became Berkshire’s longest-running bank stock holding.
Buffett initially invested in U.S. Bancorp in 2006, but in the third and fourth quarters, he significantly reduced his stake in the bank. Finally, in early 2023, Berkshire sold off its remaining 6.6 million shares of U.S. Bancorp (USB) stock, effectively closing out Buffett’s investment in the bank after a remarkable 17-year tenure.
This move indicates Buffett’s willingness to make adjustments to his portfolio and adapt to changing market conditions. While U.S. Bancorp served as a long-standing investment for Berkshire, the decision to exit the position reflects Buffett’s ongoing evaluation of his holdings and the evolution of his investment strategies over time.
Bought: Diageo PLC (DEO)
Diageo, a renowned global wine and spirits company and the owner of the beloved Guinness stout brand, has recently caught Warren Buffett’s attention. In the first quarter, Berkshire Hathaway acquired a fresh stake in Diageo (DEO) consisting of 227,750 shares, valued at approximately $40.8 million.
However, Buffett’s history with Diageo dates back much further. As far back as 1991, Berkshire purchased a substantial 31.2 million shares of Guinness, which was valued at around $302 million. At that time, Guinness was one of Buffett’s largest holdings. Subsequently, Guinness merged with Grand Metropolitan, forming Diageo in 1997. Over the years, Buffett has entered and exited positions in the company multiple times, demonstrating his dynamic approach to investing.
Buffett’s renewed interest in Diageo suggests his ongoing evaluation of investment opportunities within the wine and spirits industries. As an investor known for his long-term perspective, Buffett’s engagement with Diageo reflects the potential he sees in the company’s global reach and popular brands, such as Guinness.
