Investing

Short Sellers Going Against Warren Buffett and His Top Stocks

Short sellers are often viewed by the investing public as more than just an interesting breed. Sometimes, particularly in bear markets or during market corrections, short sellers are simply hated. After all, they are betting against the market or are betting against a stock or a sector. So what are investors supposed to make of it when short sellers are increasing their bets against Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-B)?

On top of betting against Berkshire Hathaway, it turns out that short sellers went even further by betting harder against the Oracle of Omaha’s top public stock holdings. Isn’t Buffett supposed to be considered the greatest investor of all time?

The reasons may be fleeting as to “why” short sellers have increased their bets against Buffett. The end result is that short sellers have increased their bets against him and his top four stocks. As a reminder, those four top stock holdings alone account for over half of the total Berkshire Hathaway public stock holdings.

Buffett’s top four holdings are American Express Co. (NYSE: AXP), Coca-Cola Co. (NYSE: KO), International Business Machines Corp. (NYSE: IBM) and Wells Fargo & Co. (NYSE: WFC).

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24/7 Wall St. has compared the closing price of Tuesday to the February 27 settlement date to see what has happened over the past month. Maybe comparing the short interest dates directly could have been used, but this tries to interpret what short sellers are doing in general on a “now versus then” basis rather than comparing old dates to older dates. Color has been added on each, pitting short seller bets against the total stakes of each stock held by Buffett.

American Express

This company saw its short interest rise by 10.4% to 11.695 million with about two days to cover. What is interesting here is that Berkshire Hathaway owns about 151 million shares of American Express. That makes this total short interest seem irrelevant on the surface. After all, Buffett owns almost 13 times more shares than all the short sellers have had to borrow to bet against the company.

American Express shares were down by 0.2% from the last short interest report. The stock has a consensus analyst price target of $87.40 and a 52-week trading range of $77.12 to $96.24.

Coca-Cola

The short interest in Coca-Cola increased by a sharp 13.4% to 36.734 million shares. Its days to cover is roughly three. The previous reading was 32.398 million shares at the end of February. Coca-Cola is another instance in which short sellers may seem irrelevant to Buffett. After all, Buffett’s stake in Coca-Cola is a very old stake, and it is close to 400 million shares. So Buffett’s longstanding investment here is more than 12 times the value of the current short interest as a whole.

Where this short interest increase in Coca-Cola shares gets interesting is that the closing price on Tuesday was over 5% lower than the same closing price from settlement date at the end of February. The stock has a consensus price target of $45.26 and a 52-week trading range of $38.04 to $45.00.

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