When Warren Buffett, the storied chairman and CEO of Berkshire Hathaway, buys or sells stock, the world takes note. The “Oracle of Omaha” has a well-earned reputation as one of the most successful investors in Wall Street history, so investors and financial media outlets pay close attention to what he does.
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Powered by Money.com - Yahoo may earn commission from the links above. The good news for investors is that Berkshire Hathaway, as a publicly traded company, has to tell the world what it’s buying and selling in its quarterly 13F filings with the Securities and Exchange Commission. This means that individual investors can learn in great detail where Buffett places his bets.
To save you the time, GOBankingRates took a look at some of the stocks Buffett has been busy buying and selling throughout 2019 in case you’re considering some new investments.
Last updated: Dec. 3, 2019
Amazon represents new ground for Buffett and Berkshire Hathaway, as the legendary investor has historically been averse to investing in tech stocks. Amazon is helping to broaden the diversity of Buffett’s portfolio thanks to the two separate purchases during the first and second quarters. The Amazon position still only ranks as the 25th largest in the Berkshire Hathaway portfolio at 537,300 total shares. Of course, with a share price above $1,740 as of Nov. 22, 2019, that relatively modest share count amounts to nearly $1 billion in stock value.
Restoration Hardware, now known as simply “RH,” is a new addition to the Buffett portfolio. The 1.2 million shares Berkshire Hathaway picked up in 2019’s third quarter sent RH’s stock price up more than 8% in a single day and was worth more than $227 million at recent prices. News of Buffett’s purchase was such an event that RH CEO Gary Friedman referenced it in an interview with CNBC’s Jim Cramer, “When ‘The Oracle [of Omaha]’ somehow finds your company in all the companies in the world, I never got so many people call or text me about an event ever in the history of my career.”
Apple has been one of the darlings of Wall Street in 2019, gaining about 66% in stock value through Nov. 22, 2019. Buffett made a big splash in 2016 when he first bought shares in Apple, as he had famously avoided technology stocks prior to this. His original investment of more than 9.8 million Apple shares has turned into a gold mine for Berkshire Hathaway, more than doubling in value in the years since. Berkshire Hathaway’s recent sale of more than 750,000 shares represented less than 1% of its entire position, so it shouldn’t be interpreted as a change in investment strategy. The stock still remains Berkshire Hathaway’s largest single position in terms of value, by far.
Even after Berkshire Hathaway unloaded nearly 50 million shares of Wells Fargo stock during the first and third quarters of 2019, the bank still represents Berkshire Hathaway’s fourth-largest position. Buffett has long touted his support of financial stocks, so this year’s Wells Fargo sales might have more to do with Berkshire Hathaway’s general policy of keeping its overall ownership of the company below 10% rather than a response to recent scandals at Wells Fargo, which include bank employees opening fake accounts to reach unrealistic sales goals and the bank charging customers for services they didn’t need.
Although 1.64 million shares of any stock might seem like a lot to the average retail investor, this trimming of Sirius XM stock in the Berkshire Hathaway portfolio only amounted to 1.19% of the company’s entire position. Sirius is a comparatively minor position for Buffett, ranking outside Berkshire Hathaway’s top 25 investments by dollar value. Investors have reason to be bullish on Sirius, at least over the near term. In its most recent earnings report, the company bumped up its full-year guidance for revenue, earnings and free cash flow.
Berkshire Hathaway took a position in Occidental Petroleum common stock worth hundreds of millions of dollars during the third quarter, which perhaps wasn’t a surprise to market watchers. In July, Buffett took Occidental’s CEO “to the cleaners,” in the words of activist investor Carl Icahn, by investing $10 billion in the company’s preferred stock. What was so sweet about the deal? Buffett and Berkshire Hathaway got an 8% yield on the shares, plus warrants to buy Occidental common stock. OXY’s common stock currently trades well below its 2011 high, when shares rose above $100. With a current yield above 8%, Buffett’s bet looks like the ultimate value play.
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Even though Buffett unloaded Southwest Airlines shares during the first quarter, it shouldn’t be interpreted as a change in support for the stock. The sale amounted to just a 2.18% reduction in Berkshire Hathaway’s position in Southwest. At the end of the third quarter, Southwest was still the 14th-largest holding of Berkshire Hathaway, valued at nearly $2.9 billion.
Bank of America has been Berkshire Hathaway’s second-largest position all year, so even its second-quarter purchase of just more than 31 million shares didn’t amount to more than a 3.47% change in the company’s position. Bank of America is the largest of Berkshire Hathaway’s holdings in financial companies, but it’s hardly the only one. The company’s top 10 holdings read like a who’s who of big American banks. In addition to Bank of America, other banking giants on the list include Wells Fargo, American Express, U.S. Bancorp, JPMorgan Chase and Goldman Sachs.
Berkshire Hathaway added a few million shares of U.S. Bancorp during the second quarter, but that only amounted to an increase of 2.44%. USB is the seventh-largest position in Berkshire Hathaway’s portfolio, consistent with Buffett’s fondness for financial stocks. USB’s stock has been a winner for Buffett as it currently trades near its all-time high.
Buffett made a move to increase his airline holdings by purchasing an additional 5.37 million Delta shares for Berkshire Hathaway. This positioned Delta as the 10th-largest holding in Berkshire Hathaway’s portfolio at the end of the third quarter, valued at over $4 billion. The purchase gave Buffett’s company more than 10% of Delta, which Buffett said was a “mistake” that went against his normal investment policy of keeping his stake below 10%. Buffett has taken a liking to airlines of late, as Berkshire Hathaway also owns shares in Delta rivals United, Southwest and American Airlines.
Berkshire Hathaway’s “sale” of Verizon in the first quarter really amounts to an accounting cleanup. The company only held 928 shares, valued at about $55,000, so the sale was simply a way for it to clean these stray shares off its books. The shares might have been remnants of a dividend reinvestment program, as Berkshire Hathaway cleared out the bulk of its Verizon position in 2016 when it sold more than 15 million shares.
Berkshire Hathaway’s adventures with Red Hat have been interesting in 2019. For starters, Buffett’s company bought shares of Red Hat in both the first and second quarters despite his ambivalence about tech stocks. Then Berkshire Hathaway abruptly reversed course and unloaded all of its shares in the third quarter. But appearances can be deceiving. What actually happened was that IBM acquired Red Hat during the third quarter for $190 per share, so Buffett wasn’t so much “reversing course” as simply cashing out.
Berkshire Hathaway has been lightening its position in Charter Communications throughout 2019, unloading more than 1.6 million shares along the way. The sale in the first quarter of 2019 was significant, amounting to a 19% reduction in Berkshire Hathaway’s stake. The second quarter sale, while not as big, trimmed an additional 4.97% from the company’s position. Or this could have something to do with Charter being on a huge run as it currently trades near its all-time high.
Buffett’s thirst for financial services companies continued in 2019, with Berkshire Hathaway adding about 9.4 million shares of JPMorgan Chase in the first quarter. This amounted to an 18.7% increase in Berkshire Hathaway holdings in the stock, bringing the total value of the position to more than $7 billion as of the third quarter. This placed JPMorgan Chase as the eighth-largest position in the Berkshire Hathaway portfolio, behind Apple, Bank of America, Coca-Cola, Wells Fargo, American Express, Kraft Heinz and U.S. Bancorp.
Berkshire Hathaway unloaded 53.32% of its position in Phillips 66 stock in the first quarter of 2019, followed by trimming a few hundred thousand shares in the third quarter. The massive sale in the first quarter can likely be interpreted as a major investment change, with Phillips losing favor with Buffett for whatever reason. Considering the big investment in Occidental Petroleum that Buffett made in the third quarter, Buffett doesn’t seem to have lost his fondness for energy stocks — just Phillips 66. Perhaps he was anticipating the Occidental move when he liquidated more than half of his Phillips 66 shares in the first quarter.
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Berkshire Hathaway liquidated its entire position in USG during the second quarter, cashing in nearly $1.7 billion. That doesn’t mean Buffett suddenly had a change of heart about the stock, however. Rather, USG was acquired in the second quarter by Knauf KG, the parent company of Germany’s Knauf Group. Shareholders received $43.50 in cash for each USG share, which then ceased trading on U.S. markets.
Buffett picked up a very small number of shares of PNC during the first quarter, at least by Berkshire Hathaway standards. This purchase of fewer than half a million shares increased Berkshire Hathaway’s stake in the bank by 4.94%. Given Buffett’s taste for financial services companies, this purchase shouldn’t be too surprising. His position in PNC Bank remains relatively small, ranking No. 22 in Berkshire Hathaway’s overall portfolio during the third quarter at about $1.2 billion.
If you’re just scrolling through Berkshire Hathaway’s 13F filings without the benefit of context, you might be surprised at the company blowing out 100% of its position in Torchmark during the third quarter. In reality, nothing changed regarding this stock or Berkshire Hathaway’s position except that Torchmark changed its name to Globe Life. So while the 6.5 million shares of Torchmark vanished from Berkshire Hathaway’s portfolio, they were replaced by the same amount of shares in Globe Life — but Buffett neither bought or sold either stock.
If you want to know one of Warren Buffett’s favorite stocks to buy in 2019, look no further than his own company. In each of the first three quarters of 2019, Berkshire Hathaway bought back huge amounts of its own stock. According to a Bloomberg News story on the Investor’s Business Daily website, the company bought a record $1.7 billion of its own stock during the first quarter of 2019 alone, followed by purchases of about $400 million and $700 million the following two quarters, respectively.
Although it seems like the news media stalks Buffett’s every move, he can’t take all the glory — or share all the blame — for the investments made by Berkshire Hathaway. What many investors might not know is that Buffett doesn’t call all the shots at his company. While he’s certainly in charge as the company’s CEO, Buffett also has two portfolio managers, Todd Combs and Ted Weschler, who manage multibillion slices of the company’s portfolio. In fact, Buffett admitted to CNBC that he wasn’t the one responsible for his company buying shares of Amazon stock.
In the ultimate case of “do as I say, not as I do,” Buffett doesn’t recommend that most investors buy shares of companies he owns. Rather, as he told CNBC, buying low-cost index funds “is the thing that makes sense practically all of the time.” In the same interview, the legendary investor admitted that his own stock pickers are trailing the S&P 500 index in terms of performance. After he dies, Buffett wants 90% of his money invested in an S&P 500 stock index for the benefit of his wife.
Buffett is known as a value investor, only buying shares of stock when he feels he can get a deal. So it might come as a surprise that as of November 2019, Buffett’s holding company Berkshire Hathaway held a whopping $128 billion in cash. This could be seen as a sign that the Oracle of Omaha doesn’t see value in the current stock market.
Investors can look at the quarterly reports of Buffett’s Berkshire Hathaway to see what common stocks the company owns, and they can mirror their portfolios accordingly. However, many of Buffett’s best investments are simply not available to retail investors. For example, in 2008 Buffett famously invested $5 billion in Goldman Sachs preferred shares, earning $1.27 billion in dividends and about $2.5 billion in additional capital gains by the time the investment bank redeemed the shares in 2011. The ultimate performance of Buffett’s recent purchase of Occidental Petroleum preferred shares is still up in the air, but those shares are not something the average retail investor could buy.
Fans of Warren Buffet who want to replicate his trades should know that real-time trade information about the Berkshire Hathaway portfolio is not available. Although Berkshire Hathaway is required to report its holdings to the public, those reports are only due every quarter. By the time that information hits the press, Berkshire Hathaway might well have sold out of one or more of its reported positions. Buffett isn’t exactly a rapid-fire trader, so many of his long-term holdings will be the same from quarter to quarter. Even so, you won’t usually know that Buffett has sold a stock until the quarterly report.
It’s doubtful that Warren Buffett will ever lose his reputation as one of America’s greatest investors, even though many of his favorite long-term stock positions have been losers lately. In February 2019, for example, Berkshire Hathaway lost more than $4 billion in a single day when its position in Kraft Heinz cratered by more than 25%. Teva Pharmaceuticals has also been a big loser for Buffett in 2019 as its shares were down more than 30% year-to-date through Nov. 20, 2019. Only time will tell if these stocks will be long-term losers or represent profitable buying opportunities for investors.
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This article originally appeared on GOBankingRates.com: These Are the Stocks Warren Buffett Bought and Sold in 2019
