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Summary
- Berkshire Hathaway continues to trim positions in large US banks.
- In the September quarter, four US healthcare companies have found their place in the portfolio of Warren Buffet.
- Berkshire Hathaway has completely sold out of Costco Wholesale.
Berkshire Hathaway’s third-quarter filing is out. This time Warren Buffet has given food for thought to his followers, especially with regards to banks.
The latest filing details a slew of changes made by the conglomerate in the third quarter of 2020.
One of the key highlights being that banks continue to be out of favour for the US equity portfolio of Berkshire Hathaway. However, the firm has shown an exceptional interest in pharmaceutical companies.
In the September quarter, Buffet’s firm sold stakes in US banks including shares of Wells Fargo, JP Morgan Chase, PNC Financial, M&T Bank. But this trimming of stakes by the Oracle of Omaha could be a company-specific decision. Berkshire Hathaway did increase its stakes in Bank of America.
As an insurer, the objective of Berkshire Hathaway is not only to deliver capital gains but generate substantial income as well.
US banks had been guided to shore up the reserves and avoid paying dividends at the pre-pandemic level pay-out ratios. Policymakers and healthcare officials understand the COVID-19 infection better now than they knew at the beginning of the year. The progress depicted by vaccines is also favourable, but mobilisation will likely take some time.
Berkshire has also beefed up healthcare positions in its portfolio. In the September quarter, the company purchased shares of AbbVie Inc, Pfizer Inc, Merck & Co, Bristol-Myers Squibb. It also trimmed positions in DaVita Healthcare.
Although shares of Apple Inc were sold by the firm, the investment still accounts for the largest weight in the portfolio. Apple Inc also undertook share split during the quarter, resulting in an even higher number of shares.
Berkshire also sold all positions in Costco Wholesale, which had been a long-term position of Warren Buffet. It also sold stakes in the gold miner Barrick Gold which now accounts for a small part of the portfolio.
The company invested in Snowflake Inc at the time of IPO. Shares of Snowflake Inc continue to trade at elevated levels after a highly successful public debut.
T-Mobile US was also another new entrant in the portfolio of Berkshire Hathaway. Warren Buffet also added shares of General Motors, Kroger Company, and Liberty LiLAC Group.
In the September quarter, the company kept stakes steady in many companies including the likes of American Express, Coca-Cola, Kraft Heinz Co, Moody’s Inc, US Bancorp, Bank of New York Mellon. The list also includes Amazon.com, VeriSign Inc, Suncor Energy, and more.
