Warren Buffett’s Berkshire Hathaway sold more stocks, including Apple and Bank of America, but added… [+] Two new companies. (Photo by Eric Francis/Getty Images)
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Berkshire Hathaway (BRK/A, BRK/B)’s Q3 13F report was filed after the market close on November 14. This filing gives us a quarterly opportunity to observe what Warren Buffett and his investment team of Todd Combs and Ted Weschler are doing within Berkshire’s publicly traded stock portfolio. Berkshire has a large group of wholly owned entities, but this report provides us with a breakdown of the share of US publicly traded stocks of its investments. Berkshire’s third-quarter earnings were recently announced, containing important information about its broad portfolio of wholly-owned operating companies and disclosures on declines in Apple (AAPL) and Bank of America (BAC) shares. An in-depth look at the third quarter earnings report is available here.
Berkshire’s $266 billion investment portfolio consists of 40 companies, down one company from last quarter. Berkshire was again a net seller of publicly traded stocks during the quarter. The five largest holdings, by holding size, are Apple (AAPL), American Express (AXP), Bank of America (BAC), Coca-Cola (KO), and Chevron (CVX). The top 5 holdings represent more than 71% of the total portfolio, down from 76% in the first quarter. It is worth noting that despite Apple’s massive sales, the investment portfolio remains very concentrated, with approximately 90% of assets located in the ten largest holdings.
Berkshire Stock Portfolio Percentage – Q3 2024
Glenview Trust, Berkshire Hathaway
Although the news was already known through earnings disclosures, the most surprising information was that Berkshire Hathaway sold more than $20 billion of its stake in Apple (AAPL) in the third quarter after reducing it by $90 billion in the half. First of the year. Before the initial sale, Apple shares represented more than 50% of its publicly traded portfolio but are now about 26%. The ongoing downsizing has been a shock since Buffett said at the annual meeting that Apple is a better company than old Berkshire holdings like American Express (AXP) and Coca-Cola (KO).
Given its top five holdings, plus Occidental Petroleum (OXY) and Kraft Heinz (KHC), the portfolio remains significantly overweight in financials, consumer staples, and energy compared to the S&P 500. Berkshire’s portfolio was significantly overweight in Technology because of its huge shares in Apple. share, but the recent sale has taken the technology to underweight. Berkshire controls 27% of Occidental’s outstanding shares, which, along with Chevron, leads to a significant overweight to the energy sector. A deeper analysis of the possible reasons behind the Occidental purchase can be found here. Berkshire has only one small holding in the industrial sector and no real estate companies or utilities. However, Berkshire’s wholly-owned entities include large railroads, Burlington Northern Santa Fe, and several regulated utilities and pipelines.
Berkshire stock portfolio by sector weight
Glenview Trust, Berkshire Hathaway, Bloomberg
Since the 13F does not include international stocks, Berkshire Hathaway initially announced the acquisition of about 5% of five Japanese trading companies at the end of August 2020. These holdings are Itochu Corp., Marubeni Corp., Mitsubishi Corp., and Mitsui & Co. Ltd., and Sumitomo Corp. Buffett revealed in April 2023 that Berkshire had increased its stakes in these companies to 7.4%. Buffett noted that these investments are intended to be long-term holdings, and that Berkshire may increase its stake to 9.9%.
Berkshire added two new companies, Domino’s Pizza (DPZ) and Pool Corporation (POOL). Both were relatively small additions of 0.2% and 0.05% of the portfolio, respectively. Domino’s Pizza operates franchise and company-owned pizza stores in the United States and internationally. Pool Corporation distributes pool-related products worldwide. Pool Corporation has been a darling of the coronavirus era and remains about 38% below its 2021 high.
Berkshire added to its positions in Heico Corporation (HEI/A) and Sirius XM Holdings (SIRI). Some of Sirius
Floor & Decor Holdings (FND) was eliminated from the portfolio this quarter after scaling back last quarter.
Within the financials, Berkshire trimmed its shares in Capital One Financial (COF), Bank of America (BAC), and NU Holdings (NU). Warren Buffett is considered one of the greatest investors in bank stocks of all time. Hence, the decline in exposure to the banking sector is notable, but 42% of the equity portfolio remains in financial companies.
As previously mentioned, Berkshire reduced its holdings of Apple (AAPL). Additionally, Charter Communications (CHTR) and Ulta Beauty (ULTA) were downsized. Notably, Ulta Beauty was newly added to the portfolio last quarter.
This analysis looks at Berkshire’s portfolio across a range of metrics, including 12-month forward estimates: price to earnings (P/E), price to sales (P/S), return on equity (ROE), and enterprise value to its earnings Before interest, taxes, depreciation, and amortization (EV/EBITDA), price to book (P/B), dividend yield, current debt to EBITDA, current free cash flow yield, current operating margin yield, and long-term EPS growth consensus estimates.
Evaluation metrics
Glenview Trust, Berkshire Hathaway, Bloomberg
Overall, Berkshire’s portfolio analysis reflects a cheaper price-to-earnings valuation than the S&P 500 with better profitability as measured by return on equity and operating margin with similar debt levels. The long-term (next 3 to 5 years) EPS growth rate is expected to be lower than the S&P 500. Buffett’s preference for high-quality companies that generate significant cash flows is evident from better profitability metrics combined with a higher free cash flow yield superior.
Berkshire Hathaway: Cash as a percentage of assets
Glenview Trust, Berkshire Hathaway, Bloomberg
Berkshire was a net seller of stocks in its portfolio for the eighth straight quarter, with net sales of more than $34 billion of publicly traded shares. Between stock sales and cash generated from Berkshire’s businesses, the company has raised a record level of cash and cash equivalents of more than $300 billion. Perhaps most telling, Berkshire Hathaway’s cash stock relative to its size reached 28%, the highest level since at least 1990. At the annual meeting, Buffett said there were a few significant opportunities to invest cash with an attractive expected return: “But I wouldn’t mind at all, under the current circumstances, building up the cash position. I think when I look at the alternative available in the stock markets, and I look at the combination of In the world, I find it very attractive and Buffett’s actions indicate that this view still exists.
