Investors recently got an updated look at Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) massive stock portfolio. Regulatory filings reveal that Warren Buffett and his team did some interesting buying and selling during the second quarter, including three unexpected new stock positions.
I won't keep you in suspense. Here's a rundown of what Berkshire bought and sold, and what the key takeaways for investors are.
Here's what Buffett and his team have been buying
In the second quarter, Berkshire Hathaway added to two of its existing positions and bought shares of three other stocks for the first time.
Company (Symbol) | Shares Bought | Market Value of New Shares (rounded) | New Position? |
|---|---|---|---|
Occidental Petroleum(NYSE: OXY) | 12,422,073 | $818 million | No, added 5% to existing. |
Capital One Financial(NYSE: COF) | 2,549,030 | $281 million | No, added 25% to existing. |
D.R. Horton(NYSE: DHI) | 5,969,714 | $734 million | Yes |
NVR(NYSE: NVR) | 11,112 | $68 million | Yes |
Lennar (NYSE: LEN.B) | 152,572 | $17 million | Yes |
Data source: Berkshire Hathaway SEC filings. Market value as of 8/15/2023.
To put it mildly, this wasn't a very active quarter for Berkshire Hathaway when it comes to buying stocks. And although Occidental Petroleum was the largest investment by dollar amount, it isn't exactly a surprise. Berkshire has been accumulating shares of Occidental in its stock portfolio rather aggressively since early 2022, presumably as a bet that global energy needs will remain elevated and the price of crude oil will trend upward over time.
By far, the biggest story here is that Berkshire added new positions in three homebuilders to its portfolio in the second quarter. And while they combine to a little over $800 million -- a relatively small investment by Berkshire standards -- it's entirely possible that Berkshire could continue to build positions in these.
After all, conditions for homebuilders have been surprisingly strong, even with rising home prices and spiking mortgage rates, due to a historically low level of existing home inventory. This has led the few buyers in the market to look toward homebuilders. Recent earnings reports by these and other homebuilders were rather strong, and if these favorable conditions persist, it wouldn't be surprising to see Buffett and his team continue buying.
Berkshire also did quite a bit of selling
In the second quarter, Berkshire reduced or completely sold its positions in seven different stocks, including three separate sales worth $1 billion or more.
Company (Symbol) | Shares Sold | Market Value of Shares Sold | Did Berkshire Sell All Shares? |
|---|---|---|---|
Chevron (NYSE: CVX) | 9,287,475 | $1.52 billion | No, reduced stake by 7% |
Activision Blizzard(NASDAQ: ATVI) | 34,781,660 | $3.17 billion | No, reduced stake by 70% |
General Motors(NYSE: GM) | 18,000,000 | $610 million | No, reduced stake by 45% |
Celanese(NYSE: CE) | 3,460,481 | $436 million | No, reduced stake by 39% |
Globe Life(NYSE: GL) | 3,838,153 | $439 million | No, reduced stake by 60% |
McKesson(NYSE: MCK) | 2,289,864 | $1.00 billion | Yes |
Marsh & McLennan(NYSE: MMC) | 404,911 | $77.7 million | Yes |
Data source: Berkshire Hathaway SEC filings. Market value as of 8/15/2023.
Berkshire sold quite a bit more stocks than it bought during the second quarter -- nearly $7.3 billion in all.
To be fair, we knew about the massive reduction in the Activision Blizzard stake about a month ago, but the Chevron reduction was more of a surprise, especially since Berkshire is clearly so bullish on Occidental.
There's one other stock Berkshire bought in the second quarter
It's also important to mention that Berkshire Hathaway has been buying one other stock that isn't on these lists: Berkshire Hathaway itself. And it seems to think that its own stock is a better value, at least judging by the amount of money it has spent.
In the second quarter alone, Berkshire bought back about $1.3 billion of its own shares, and while this is significantly less than it bought in the first quarter, it's still far greater than the dollar amount of the purchases in the table. In fact, since Berkshire modified its buyback program in 2018 to make it easier for Warren Buffett and vice chairman Charlie Munger to authorize buybacks, the company has spent more than $71 billion in this way.
A net seller of stocks
One key takeaway is that Berkshire Hathaway was a big net seller of stocks during the second quarter, which could indicate that Buffett and his stock pickers think the market rally in 2023 had become a bit overdone. And we don't know for sure which of these moves were made by Warren Buffett himself, and which were made by his two investing lieutenants Todd Combs and Ted Weschler, who have been given increasing responsibility for Berkshire's capital in recent years.
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Matthew Frankel, CFP® has positions in Berkshire Hathaway and General Motors. The Motley Fool has positions in and recommends Activision Blizzard, Berkshire Hathaway, Lennar, and NVR. The Motley Fool recommends Chevron, General Motors, and McKesson and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
