Investors and much of the public are still in love with Warren Buffett. The iconic billionaire who has held the title of the world’s wealthiest person can still make major news even as he is nearing 90 years old. Every three months the investing community gets to see how Buffett and his fellow portfolio managers have invested money for Berkshire Hathaway Inc. (NYSE: BRK-A) and for its shareholders. This conglomerate has been a large acquirer of public stocks for years, and it actually could flex its muscles as having perhaps the largest privately run mutual fund in the world. The reason for owning so many great companies is that Buffett himself has complained in recent years that the cost to acquire large public companies outright in the current climate has just become too high at this stage in the stock market.
What matters as 2019 is rapidly fading into 2020 is that Berkshire Hathaway is the largest conglomerate of all American corporate giants by far, with a $530 billion market cap. Even at the end June, the company held total public equity holdings worth a new record of $208.1 billion, though the quarterly SEC financial filing (10-Q) showed that the public equity stakes totaled $220.05 billion as of the end of September, while the 13F filing shows $24.67 billion in equity holdings. Buffett and his portfolio managers also had almost $100 billion worth of shares owned in many of the top financial companies as well, without even tallying up the value of its own GEICO and other insurance operations.
Buffett and his portfolio managers have made many portfolio changes regarding which stocks and sectors they have invested deeply into over the years. Buffett has given up his fear of tech stocks and airlines, and his “money voting” shows that he is still quite bullish ahead for banks and financials. The Oracle of Omaha sits on more than $100 billion in raw cash, and he has not pulled the trigger on a whale of an acquisition for several years now, so he and his team have been using the massive stockpile of cash to make more additions to Berkshire Hathaway’s stock portfolio.
24/7 Wall St. has tracked Buffett’s top stock holdings and when he makes moves in and out of other positions since its inception (and yours truly has followed this since the mid-1990s). Investors who are into “whale watching” often chase the investment moves of the great hedge fund and portfolio managers if they see an opportunity, and there may still be no larger whale than Buffett, even if it may be his portfolio managers who made the investment.
Ahead of the 13-F filing for a September 30, 2019, ending date, the quarterly financial filing (10-Q) with the SEC showed that approximately 68% of the aggregate total fair value of its equity investments was concentrated in just the five tops companies:
- American Express Co. (NYSE: AXP) at $14.5 billion
- Apple Inc. (NASDAQ: AAPL) at $40.3 billion
- Bank of America Corp. (NYSE: BAC) at $22.6 billion
- Coca-Cola Co. (NYSE: KO) at $18.9 billion
- Wells Fargo & Co. (NYSE: WFC) at $20.7 billion.
Also worth noting was that the $112.207 billion noted in those direct holdings for a cost basis had net unrealized gains of $107.8 billion for a total value of $220.05 billion.
Additional notes have been made on the top filings and additional stock holdings below. Additions and deletions from the portfolio were given their own notations individually as well.
Financial stock investments were already close to 20% of the entire market cap of Berkshire Hathaway. That’s up from about 12% just at the end of 2010, when the nation was still trying to recover from the Great Recession. Here are the notes on Buffett’s largest individual holdings named above:
- American Express remained the same at 151.61 million shares.
- Apple was slightly lower at 248.838 million shares, down from the 249.59 million shares at the end of June.
- JPMorgan Chase & Co. (NYSE: JPM) was unchanged at 59.51 million shares.
- Wells Fargo was 378.369 million shares, down from 409.80 million shares as of June 30.
Bank of America is getting its own note as it had been previously added to in the second quarter and it was already counted as a 10.31% stake for the 927 million or so shares. That was reported to have been about 950 million shares more recently (ahead of the 13F), and it was above the SEC’s prior 10% threshold that Berkshire Hathaway had asked to be able to buy more of. An October 10 transaction via an SEC filing showed that Berkshire Hathaway had disposed of 2.24 million shares to have a total of 947,760,000 common shares of Bank of America. This was mentioned in the explanation note:
On October 10, 2019, Berkshire Hathaway Inc. sold its 81% interest in AU Holding Company, which was the direct owner of Continental Indemnity Company and California Insurance Company, with aggregate BAC common stock holdings between them of 2,240,000. At the time of the AU Holding Company transaction, the market value of the shares of Bank of America Corporation (“BAC”) common stock held by Continental Indemnity Company and California Insurance Company was $63,728,000, based on the closing per share price of BAC common stock that day. There was no consideration specifically allocated to the BAC common stock holdings of Continental Indemnity Company and California Insurance Company in connection with the AU Holding Company transaction.
Amazon.com Inc. (NASDAQ: AMZN) already had been considered to be a relatively new stake for Team Buffett’s portfolio managers, but Buffett had praised the growth and explosive change brought on by Jeff Bezos in the past. The conglomerate’s stake was kept the same in September as it had been raised its stake by more than 10% to end the second quarter with just over $1 billion at the close. Amazon’s stake is up to 537,300 shares from the previous holding of 483,300 shares.
There were some changes worth noting in oil and gas, although one might have easily been expected. Phillips 66 (NYSE: PSX) was 5.18 million shares at the end of September, down from 5.55 million shares in June. Occidental Petroleum Corp. (NYSE: OXY) was a new stake of 7.467 million shares, but this was likely an add-on from the $10 billion merger assistance Buffett contributed for Anadarko. Buffett and Berkshire Hathaway had already committed to invest a total of $10 billion in connection with Occidental in its acquisition of Anadarko. That acquisition and the Berkshire Hathaway investment in Occidental closed on August 8, 2019. Berkshire’s investments in Occidental included newly issued Occidental Cumulative Perpetual Preferred Stock with a total liquidation value of $10 billion, along with warrants to purchase up to 80 million shares of Occidental’s common shares at an exercise price of $62.50 per share, but Occidental was handily under $40 more recently.
Some slight changes and notes have been made in financials here. Globe Life Inc. (NYSE: GL) appeared to be a new stake of 6.35 million shares, but this is the former Torchmark in which Buffett had a stake. The company targets supplemental health insurance products and annuities to lower-middle to middle-income households. U.S. Bancorp (NYSE: USB) was the same 132.46 million shares as in June, but it had been raised the prior quarter from a previous holding of 129.31 million.
RH (NYSE: RH) was a new stake as of September 30 of 1.208 million shares in the luxury home furniture seller, a move that is obviously tied to one of the portfolio managers rather than Buffett himself.
Kraft Heinz Co. (NASDAQ: KHC) has continued to be a thorn in the side of Buffett, and Berkshire Hathaway’s stake likely will be buried here for quite some time. The Kraft Heinz holdings remained unchanged at 325.63 million. Its latest quarterly filing with the SEC (10-Q) signaled that it held a stake in Kraft Heinz common representing 26.6% of the outstanding shares. That filing from earlier in November said:
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $9.1 billion at September 30, 2019 and $14.0 billion at December 31, 2018. The carrying value of our investment was approximately $13.8 billion at both September 30, 2019 and December 31, 2018.
Other changes and positions with updates since the end of the September 30 date have been combined below.
Charter Communications Inc. (NASDAQ: CHTR) was effectively the same 5,426,609 share stake, but it had previously been lowered from 5.71 million shares. As far as shares in the airlines companies, Buffett’s stakes were the same in American Airlines Group Inc. (NASDAQ: AAL), Delta Air Lines Inc. (NYSE: DAL), Southwest Airlines Co. (NYSE: LUV) and United Airlines Holdings Inc. (NASDAQ: UAL).
Sirius XM Holdings Inc. (NASDAQ: SIRI) was 136.28 million shares in September, down slightly from 137.92 million shares in June. One issue to consider here is that there are also the same number of Liberty Media shares that are directly tied into Sirius XM.
Merger issues have already removed some recent holdings as well:
- The arbitrage stake of Red Hat Inc. (NYSE: RHT) disappeared as the Red Hat acquisition by International Business Machines Corp. (NYSE: IBM) closed over the summer.
- USG Corp. (NYSE: USG) already had been eliminated in the shares owned by Team Buffett, after years and years of ownership, after Knauf KG acquired the company in a $7 billion deal that took out Buffett’s 30% or so stake in the company.
That’s it for the Warren Buffett stake changes.