Investing

Major Changes Seen in Berkshire Hathaway and Warren Buffett Stock Holdings

Jon C. Ogg

Published: August 14, 2018 5:35 pm

Last Updated: January 11, 2020 7:24 pm

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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Again, a recent release from Berkshire Hathaway confirmed that some “10% stakes” had been sold and stakes had been increased in other companies in the same industries in banking and airlines. That press release said:

These buy and sell decisions did not reflect our investment management’s views as to the relative attractiveness of the bought and sold securities but were rather a response to the 10% limitation. Similar situations may occur in future quarterly reports as Berkshire continues to have 9% plus holdings in a number of equity securities that are active repurchasers of their shares.

There have been some additional filings prior to the 13F filing for June 30, 2018, in companies where Berkshire Hathaway owns major stakes. Three of these stakes are shown and additional notes have been made in the full public equity holdings.

Axalta Coatings Systems Ltd. (NYSE: AXTA), according to a more recent 13G filing, had 24.264 million shares owned by Berkshire Hathaway and its affiliated persons and entities. As of December 31, 2017, Buffett and his team owned 23.324 million shares, and that was said to be 9.52% of the shares outstanding. Based on a $30 share price (and in a 52-week trading range of $28.04 to $38.20), the current market capitalization rate is $7.38 billion, and that puts the stake at a value at roughly $728 million.

DaVita Inc. (NYSE: DVA) was shown in a May 11, 2018, SEC filing to be a stake of 38,565,570 shares, representing 22.1% of the shares outstanding. That was the same size stake as at the end of 2017, though at that time the stake was just 21.19% of the shares outstanding.

USG Corp. (NYSE: USG) was a stake in which some reporting changed in the latest data. A 13D filing from June 10, 2018 (prior to the June 30 cut-off date for the holdings) showed an aggregate of 43,387,980 shares, worth 31.1% of the outstanding shares. At the end of 2017, Berkshire Hathaway’s stake was listed as 39,002,016 shares, a holding of 27.65% of the shares outstanding. Gebr. Knauf KG is acquiring USG in a transaction valued at approximately $7.0 billion, and Berkshire Hathaway has agreed to vote in favor of the terms of the merger. The transaction is expected to close in early 2019.

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Of the other banking and airline stock changes, these have been covered first due to some being in the 10.0% SEC thresholds. Other holdings will be reflected in the full batch.

American Airlines Group Inc. (NASDAQ: AAL) was a slightly smaller stake of 44.7 million shares, less than 2 million shares changed from the prior report.

Bank of New York Mellon Corp. (NYSE: BK) was a larger stake of 64.8 million shares, up from 62.19 million shares.

Delta Air Lines Inc. (NYSE: DAL) was a larger stake of 63.67 million shares, up from the prior report of almost 54 million shares.

General Motors Co. (NYSE: GM) was a slightly larger stake of 51.39 million shares, up from 50 million shares.

Goldman Sachs Group Inc. (NYSE: GS) is a larger stake of 13.25 million shares, up from 10.959 million in the prior report. That came from the old recession financing Buffett made via preferred shares that he ultimately converted to an equity stake.

Southwest Airlines Co. (NYSE: LUV) was a larger stake at 56.54 million shares than the 47.66 million in the prior report.

United Continental Holdings Inc. (NYSE: UAL) was 26.684 million shares, and that’s down slightly from 27.7 million in the prior report.

Phillips 66 (NYSE: PSX) was down to about 34.7 million shares, which we already knew had been lowered due to that 10% holding threshold in prior months.

Sirius XM Holdings Inc. (NASDAQ: SIRI) was the same 137.91 million shares, but there are additional Liberty holdings in Liberty Global (up), Liberty Media and Liberty Latin America that are often grouped together by investors.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) was a larger stake at 43.249 million shares, up from about 40.5 million shares.

U.S. Bancorp (NYSE: USB) saw its shares rise to 100.69 million shares by the end of June from the prior 90.847 million.

The Monsanto stake no longer appears due to the company being acquired, and Verisk Analytics Inc. (NASDAQ: VRSK) has been deleted or sold from the Buffett and Berkshire Hathaway public stock holdings.

Charter Communications Inc. (NASDAQ: CHTR) was a smaller stake of 7.5 million shares, down from 8.22 million previously reported.

Other public holdings in the Berkshire Hathaway 13F filing have been shown below.

Costco Wholesale Corp. (NASDAQ: COST) was the same stake at 4,333,363 shares.

Johnson & Johnson (NYSE: JNJ) was the same tiny stake of only 327,100 shares, but Buffett watchers know this is a leftover bit from a much larger stake in years past.

M&T Bank Corp. (NYSE: MTB) was the same position at 5.382 million shares, and this stake has been static in size for quite some time.

Mastercard Inc. (NYSE: MA) was the same 4.934 million shares.

Mondelez International Inc. (NASDAQ: MDLZ) is the same position again at just 578,000 shares, handily lower than in the past and dating back to the Kraft breakup.

Moody’s Corp. (NYSE: MCO) was the same position of 24.669 million shares again, but this stake is much lower than in years past.

Procter & Gamble Co. (NYSE: PG) is still a tiny stake of just 315,400 shares, far lower than before the Duracell swap. The stake had once peaked at 96.3 million shares.

Restaurant Brands International Inc. (NYSE: QSR) was the same stake at 8.438 million shares. As noted previously, this stake has been much larger, if you consider the $3 billion in perpetual preferred shares Buffett received.

Sanofi (NYSE: SNY) was the same position at 3.905 million shares.

Store Capital Corp. (NYSE: STOR) was the same 18.62 million shares.

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Synchrony Financial (NYSE: SYF) was the same stake at roughly 20.8 million shares.

Torchmark Corp. (NYSE: TMK) was the same stake at 6.35 million shares.

United Parcel Service Inc. (NYSE: UPS) was the same position of just 59,400 shares, which is way down from in 2012.

Verisign Inc. (NASDAQ: VRSN) was the same 12.9 million share stake, but that had been reduced from 13.0 million after having previously grown in 2014.

Verizon Communications Inc. (NYSE: VZ) was practically eliminated previously, but this remained the same 928 shares after having been as much as 15 million shares during most of 2016.

Verisk Analytics Inc. (NASDAQ: VRSK) was eliminated.

Visa Inc. (NYSE: V) was the same 10.56 million share stake, but this remains larger than when the stake was first taken.

Please note that other stakes may have been represented in previous filings that have been made since the June 30, 2018, cut-off period for 13F filings. Additional SEC filings also may have altered some of the stakes in the 13F filing as well.