Warren Buffett & Berkshire Hathaway Make Key Changes to 2019 Stock Picks
Berkshire Hathaway Inc. (NYSE: BRK-A) has released its public equity holdings as of March 31, 2019. Warren Buffett still runs Berkshire Hathaway and, as he is one of the richest men alive, he is considered to be one of the greatest investors of the modern era. Investors automatically assume he knows quite a bit more than a thing or two about stock picking and investing. Buffett is also considered to be “Moby Dick” when it comes to the so-called whale-watchers who chase stock picks and strategies of the best investors.
24/7 Wall St. has tracked the changes among Buffett’s investment picks and other top investment managers, hedge funds and independent investors for years now. Berkshire Hathaway would absolutely be at the top that whale-watcher’s list.
Some portfolio changes are made gradually, while other changes are made rapidly. And now many of the new investment selections are made by portfolio managers Todd Combs and Ted Weschler as they are free to manage billions of dollars worth of capital without much oversight by Mr. Buffett nor by Charlie Munger. Just don’t count Warren Buffett out as being involved — he eats, breathes, and lives for discovering new large financial opportunities and businesses. Some of those opportunities are seen in his public equity holdings within the Berkshire Hathaway empire.
We have focused on only the major holdings of Berkshire and the positions which actually changed from the prior quarters to keep the list of changes relative.
The first two positions which have to be considered here are Berkshire Hathaway’s $10 billion committed-but-still-pending investment in Occidental Petroleum Corp. (NYSE: OXY). The oil giant is now set to win the Anadarko buyout over rival Chevron, but the investment will not be made until the acquisition actually closes. Buffett also released the whopper of news that “one of his portfolio managers” finally bought shares of Amazon.com Inc. (NASDAQ: AMZN) and that the upcoming 13F filing for the first quarter of 2019 would reflect that. The actual size of the holding may grow or may just be a short-term investment for the conglomerate and its managers.
Buffett’s equity portfolio recovered handily with over $15 billion in related gains in the first quarter of 2019 after a late-2018 panic. It was also seen that Berkshire Hathaway’s share buybacks were less than aggressive despite the buyback criteria being dwindled down to whenever Team Buffett & Munger decide to buy back stock. The full SEC filing for the March 31, 2019 holdings showed almost $199.5 billion (versus more than $183 billion as of December 31, 2018) in direct equity holdings, not including convertibles and other related holdings.
These are Buffett’s top stock holdings and positions worth noting during the first quarter of 2019. We have also included what the percentage stake held by Berkshire Hathaway was at the end of 2018, but that is too soon to update for the end of the first quarter.
The stake in Amazon.com Inc. (NASDAQ: AMZN) was 483,300 shares. Again this was a known addition from one of Buffett’s portfolio managers but the actual size was not known. The combined value at the end of the first quarter was shown to be just over $860 million.
American Express Co. (NYSE: AXP) was the same 151.6 million shares as it has been for years. Berkshire Hathaway was the largest AmEx holder of all, with a better than an 18.1% stake at the end of 2018.
Apple Inc. (NASDAQ: AAPL) was again listed as 249.59 million shares in the 13F filing, which was the same as the prior quarter but down marginally from the 252.47 million shares in September. While Buffett had been considered a seller, the man himself explained that one of the portfolio managers had sold Apple shares to make an unrelated purchase and that Buffett himself has sold no Apple shares. That also represented close to a 5.4% stake at the end of 2018.
Bank of America Corp. (NYSE: BAC) was the same 896.17 million shares at the end of March as it was at the end of 2018 but it had been raised in the fourth quarter. Berkshire Hathaway was listed as holding a 9.4% stake and the largest BofA stockholder at the end of 2018.
Coca-Cola Co. (NYSE: KO) was the same 400 million shares, another stake that has not changed in many years. Berkshire Hathaway was listed as the largest holder of Coca-Cola at the end of 2018 with almost a 9.4% stake.
Wells Fargo & Co. (NYSE: WFC) was a stake of 409.8 million shares, down from the 426.77 million shares at the end of 2018 and down from the September 2018 stake of 442.36 million shares. Despite having trimmed the exposure to stay under the 10% SEC threshold, Berkshire Hathaway’s stake in Wells Fargo was 9.5% at the end of 2018 and was the largest holder by more than 2 full percentage points.
Kraft Heinz Co. (NASDAQ: KHC) has been a continued disappointment that Buffett has admitted he got it wrong. Unfortunately, even without Kraft Heinz changing from 325.63 million shares counted (worth $10.6 billion at the end of the first quarter), this is the type of position and type of company that Buffett might make the same mistake in over and over.
Berkshire Hathaway confirmed in 2018 that some “10% stakes” had been sold and others had been increased in other equity securities around the SEC’s 10% ownership threshold for filings and restrictions. There may have been other slight changes made in the Berkshire holdings, but the main changes and positions worth noting have been shown below.
American Airlines Group Inc. (NASDAQ: AAL) was a slightly smaller stake of 43.7 million shares, the same as December but lower than the 44.7 million shares in September.
Bank of New York Mellon Corp. (NYSE: BK) was the same 80.94 million shares at the end of march, but this was raised previously from 77.85 million shares at the end of September and from 64.8 million shares in June.
Charter Communications Inc. (NASDAQ: CHTR) was listed as 5,710,711 shares in March, down from 7.03 million previously.
Costco Wholesale Corp. (NASDAQ: COST) was the same 4,333,363 share stake and worth over $1 billion.
DaVita Inc. (NYSE: DVA) was the same 38,565,570 shares worth over $2 billion.
Delta Air Lines Inc. (NYSE: DAL) was listed as 70.91 million shares, a higher stake than the prior 65.54 million shares and has been raised previously.
General Motors Co. (NYSE: GM) was the same 72.27 million shares as in December, but it had previously been up from 52.46 million shares in September and from 51.39 million shares before then.
Goldman Sachs Group Inc. (NYSE: GS) was the same 18.35 million shares worth some $3.5 billion at the end of the first quarter.
JPMorgan Chase & Co. (NYSE: JPM) was a larger stake of 59.51 million shares, up from 50.12 million shares at the end of 2018 and up from the September stake of 35.66 million shares. That was roughly $6 billion in value at the end of March.
Oracle Corp. (NYSE: ORCL) was confirmed as having been removed in December’s filing as it also did not appear, but had been a new stake of 41.4 million shares as of the end of September.
Phillips 66 (NYSE: PSX) was down to 5.552 million shares, down about half from the 11.9 million shares at the end of 2018 and lower than the 15.43 million shares in September. This stake was far lower than the 34.7 million shares when Buffett decided to get out from under the 10% SEC holding threshold.
PNC Financial Services Group Inc. (NYSE: PNC) increased to 8.67 million shares by the end of March, up from 8.26 million shares in December and up even further from the prior 6.09 million shares in September.
RedHat Inc. (NYSE: RHT) was listed as over 5.1 million shares, up from the 4.18 million shares at the end of 2018. This may be an arbitrage play on the IBM merger spread. Buffett and his team have made similar merger-arb transactions in the past.
Restaurant Brands International Inc. (NYSE: QSR) was the same stake but was a substantial stake of 8,438,225 shares worth 3.3% as of the end of 2018.
Southwest Airlines Co. (NYSE: LUV) was a small decrease to 53.65 million shares — down from 54.85 million shares at the end of 2018 (and down from 56.05 million shares in September and 56.54 million shares at the end of June).
StoneCo Ltd. (NASDAQ: STNE), a fintech company, had been a new stake of about 14.17 million shares as of the end of 2018 and it was the same stake in March.
Store Cap Corp. (NYSE: STOR) was the same stake of 18,621,674 shares, worth $623 million at the end of March.
Suncor Energy Inc. (NYSE: SU) had been a new stake of 10.758 million shares in December, but it was the same size in shares at the end of March.
Synchrony Financial (NYSE: SYF) was the same 20.8 million shares or so, worth more than $660 million at the end of the first quarter.
Travelers Companies Inc. (NYSE: TRV) was the same 5.96 million shares at the end of March, but it had been raised in December after having been a new stake of 3.54 million shares at the end of September.
United Continental Holdings Inc. (NYSE: UAL) was the same 21.94 million shares in March versus December, but this was down from the 25.98 million shares in September (and down from 26.684 million shares in June and 27.7 million shares in March).
U.S. Bancorp (NYSE: USB) was 129.31 million shares at the end of March, same as at the end of December (but up from 124.92 million shares in September and 100.69 million shares at the end of June).
USG Corp. (NYSE: USG) was the same 39 million or so shares in March, worth almost $1.7 billion at the end of the first quarter.
VeriSign Inc. (NASDAQ: VRSN) was the same 12.95 million shares, worth close to $2.35 billion. This was nearly an 11% stake in VeriSign and Berkshire Hathaway appears to be the largest outside holder of the company.
Verizon Communications, Inc. (NYSE: VZ) was finally withdrawn entirely, but it had been too small to even count.
There are many of the Liberty shares tied in with Sirius XM Holdings Inc. (NASDAQ: SIRI) at 137.9 million shares for a 2.99% stake. There are also millions of shares in the Liberty Media Sirius XM A and C shares worth a combined $1.76 billion at the end of the first quarter. Liberty Global A and C holdings were valued at $671 million and Liberty Latin America was valued at almost $77.5 million.
Also worth noting, there are 12 positions that Credit Suisse screened out that Buffett might want to look at to fill that “whale of a deal” merger criteria. While some of those seem odd for Buffett based on history, they are likely all companies that Buffett would approve of you owning on your own.