It's no secret that Warren Buffett's Berkshire Hathaway (BRK.B) has been shedding stock and hoarding cash, but that doesn't mean the holding company's portfolio managers are done dipping a toe or two into some new names, and even adding a little exposure to others.
As previously reported, Warren Buffett is selling large chunks of his favorite stocks, such as Apple (AAPL) and Bank of America (BAC). Sure, everyone would like to know why, but then Warren Buffett didn't become one of the greatest investors of all time by telling people how to front run his trades.
What we do know is that Berkshire Hathaway was a net seller of equities to the tune of $36 billion in the third quarter. Furthermore, the company halted stock buybacks in Q3 after repurchasing nearly $3 billion worth of BRK.B shares over the first half of the year. For context, Berkshire repurchased more than $9 billion worth of BRK.B stock in all of 2023.
As a result, Berkshire holds $320 billion in cash vs just $272 billion in equity investments. Put another way, Buffett owns more cash than stocks. If share prices should suffer a broad and steep decline, Berkshire Hathaway will have ample resources to be greedy when others are fearful.
But before we get into Berkshire's most recent buys and sells, it's important to know that Buffett has always run a highly concentrated portfolio. Excluding the company's Japanese brokerage stocks, Apple alone accounts for 26% of Berkshire's equity holdings, according to data from WhaleWisdom. (That's down from almost 50% a year ago.)
Furthermore, Berkshire's top five U.S. equity holdings comprise about two-thirds of its portfolio value, while the top 10 account for more than 80%.
As Buffett likes to say, diversification is for those who don't know what they're doing.
Also please note that Buffett himself is thought to handle the largest positions in the Berkshire Hathaway portfolio. Buffett says his co-managers – Ted Weschler and Todd Combs, who is CEO of Geico – act independently. Buffettologists generally assume Berkshire's smaller buys and sells are the work of these colleagues.
Stocks Warren Buffett is buying
Berkshire Hathaway initiated two positions in the third quarter of 2024: Domino's Pizza (DPZ) and Pool (POOL). The size of the new stakes suggests these were not Warren Buffett's picks, but let's take a brief look anyway.
Berkshire bought almost 1.3 million shares in Domino's Pizza during the third quarter, a stake worth $549.4 million as of September 30. With a weight of 0.21%, DPZ ranks as the 27th most material holding in Berkshire's U.S. equity portfolio.
Berkshire now owns 3.7% of DPZ common shares outstanding, making it the pizza chain's seventh-largest shareholder. Wall Street analysts, whom Buffett totally ignores, are likewise bullish on DPZ's prospects – at least over the next 12 months or so.
Of the 34 analysts covering DPZ surveyed by S&P Global Market Intelligence, 18 rate it at Strong Buy, four call it a Buy, 11 have it at Hold and one says Sell. That works out to a consensus recommendation of Buy, with high conviction.
As for Pool, which describes itself as the largest distributor of supplies, equipment and machinery for swimming pools worldwide, Berkshire Hathaway initiated a stake of 404,057 shares worth $152.2 million as of the end of Q3.
POOL's weight of 0.06% makes it the 30th largest holding in the Berkshire Hathaway portfolio. Suffice to say, this name won't be all that important to the conglomerate's overall results. Meanwhile, with an ownership stake of a little more than 1%, Berkshire is POOL's 21st largest shareholder.
As previously reported, Berkshire has been adding to its position in Sirius XM Holdings (SIRI). The investment, which is thought to be handled by Ted Weschler, includes purchases of a tracking stock for Liberty Media (LLYVA), as well as the merger of Sirius XM and the tracking stock. (Happily, this means we can all forget about Liberty Sirius XM Group, Series A and Liberty Sirius XM Group, Series C.)
The bottom line is that BRK.B now holds 105.1 million shares in SIRI, bringing its weight in the portfolio up to 0.9% from 0.1%. The stake, worth $2.5 billion as of the end of Q3, further cements BRK.B's position as SIRI's largest shareholder, owning more than a third of its common stock outstanding.
Lastly, Berkshire upped its stake in Heico (HEIA) by 5,445 shares. The position, worth $213.9 million, has a weight of less than 0.1% in BRK.B's stock portfolio.
Stocks Warren Buffett is selling
As is well known by now, Buffett has been selling Apple stock even though the iPhone maker remains his favorite name by far. He has also greatly pared back Berkshire Hathaway's exposure to Bank of America.
Whether these moves were made for tax purposes or regulatory reasons or because Buffett is calling a market top is not known.
Here's what market participants do know based on Berkshire Hathaway's Form 13F filed with the Securities and Exchange Commission on November 14.
After a series of sales, Berkshire Hathaway holds an even 300,000 shares in Apple. At more than 26% of BRK.B's U.S. equity portfolio value, the iPhone maker remains Buffett's biggest single bet by far.
Buffett is also reducing exposure to BAC, by 23% in the third quarter alone. With a weighting of almost 12% – down from almost 15% three months ago – Bank of America is Berkshire's third largest holding. The stake was worth $32 billion as of the end of Q3.
Staying in the financial sector, Berkshire cut its stake in Capital One Financial (COF) by 7%, selling a total of 719,052 shares. With a 0.5% weight in the portfolio, COF remains Berkshire's 19th largest holding.
In other sales, Berkshire slashed its stake in Nu Holdings (NU) by nearly a fifth, and decreased its investment in Charter Communications (CHTR) by more than 26%.
Turning to the department of "that didn't last long," Berkshire essentially exited its stake in Ulta Beauty (ULTA), a position it initiated earlier this year.
As for total exits, Berkshire sold off what remained of its stake in Floor & Decor Holdings (FND), a stock it first bought in the third quarter of 2021.
