Major Changes Seen in Berkshire Hathaway and Warren Buffett Stock Holdings

Berkshire Hathaway Inc. (NYSE: BRK-A) has released its major list of public equity holdings as of June 30, 2018. This is the largest conglomerate in America, and founder Warren Buffett has been crowned as one of the greatest investors of all time. Buffett even previously held the title of the world’s richest man, and that makes the so-called whale watchers look rather closely at what Buffett and his team are buying or selling in the stock market.

It turns out that Berkshire Hathaway may be a mix when it comes to industry codes. That means it is taking on aspects of conglomerates, industrials, financials, hedge funds and private equity.

24/7 Wall St. has tracked Warren Buffett and Berkshire Hathaway’s investments for years. The more recent observations about Buffett’s portfolio changes coming into mid-2018 have been quite different from many of the historic and traditional Buffett picks. What also has been seen is that Berkshire Hathaway is now making updates to holdings after it owns the statutory 10% of an issuer’s outstanding shares. These are all combining into making the 2018 Buffett stocks look almost night and day versus the past.

Buffett and his team of portfolio managers had public equity holdings of $195.61 billion for the total value of the 13F filing with the Securities and Exchange Commission. This dollar figure was shown to be about $179 billion in the quarterly earnings report (10-Q). This is the equity value of the investment portfolio only, and it does not include any of the public debt and convertible securities held by Berkshire Hathaway.

Investors who chase Buffett’s investment ideas need to understand that Ted Weschler and Todd Combs have made more aggressive investments on behalf of Berkshire Hathaway. Charlie Munger also might have a role in anything that looks like a Buffett stock pick. It was the team under Buffett that made the big commitment in 2016 to make a multi-billion dollar investment into the major airline stocks. A recent Buffett release showed that a self-imposed 10% ownership has caused the company to sell certain banking and airline industries, while increasing some holdings in the same industries while remaining under the 10% issue. Berkshire Hathaway’s earnings report from the quarter ended June 30, 2018, included combined gains of $4.824 billion in direct investments and another $294 million in gains on derivatives. The gain in derivatives is not reflected in the holdings as of June 30, 2018.

Buffett already has confirmed in prior quarters that his first technology pick of International Business Machines Corp. (NYSE: IBM) was a big mistake. Buffett’s IBM stake did not appear at all in the same 13F filing from May 15, 2018 (for March 31, 2018 holding date). We also have seen that Buffett continued to increase his position in Apple Inc. (NASDAQ: AAPL). In fact, the Berkshire Hathaway quarterly earnings report showed that Apple stake was worth a whopping $47.2 billion. Buffett also admitted back in 2017 that Amazon and online retailing elsewhere were top reasons for why he sold most of his shares in Walmart Inc. (NYSE: WMT). That Walmart stake is now down to just 1.393 million shares, the same as at the end of March.

Berkshire Hathaway’s balance sheet under insurance and other operations also showed another investment in Kraft Heinz Co. (NASDAQ: KHC) that has been on the books for some time now and was valued at that time at $17.53 billion (versus $17.635 billion at the end of 2017) in the 10-Q. The 13F filing released on August 14 showed this as the same 325.634 million shares of Kraft Heinz worth some $20.456 billion. The quarterly earnings report filing also showed that roughly 70% of the aggregate fair value was concentrated in Buffett’s big-five companies:

  • American Express Co. (NYSE: AXP) was valued at $14.9 billion and is the same 151.61 million shares per the 13F filing.
  • Apple Inc. (NASDAQ: AAPL) was a larger stake and was valued at $47.2 billion at the end of June and this is now listed as about 239.5 million shares.
  • Bank of America Corp. (NYSE: BAC) is held from the conversion of preferred securities invested into the company after the recession. This is valued at $19.7 billion as of June 30, 2018, a stake of about 679 million shares.
  • Coca-Cola Co. (NYSE: KO) was valued at $17.5 billion, and this is the same 400 million share stake as has been seen for years.
  • Wells Fargo & Co. (NYSE: WFC) was valued at $26.4 billion, and the stake of 452.01 million shares is down slightly from the prior 456.5 million.

Investors need to understand that Team Buffett is generally a passive investor. That said, Weschler and Coombs have been encouraged to take board seats on companies they invested in. With those few exceptions, Berkshire Hathaway recently issued a press release signaling that the company wishes to avoid owning 10% or more of the outstanding shares of public companies. Yet, some companies are repurchasing and retiring their own shares and that can sometimes require Berkshire Hathaway to make minor sales to avoid hitting the 10% threshold.

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