By Brian Baker
Warren Buffett is arguably the most famous investor in the world, and his investing moves are closely followed. Every quarter, the company he heads, Berkshire Hathaway, discloses its current holdings to shareholders.
Here are some of the changes Buffett and his two chief investment officers, Todd Combs and Ted Weschler, made during the first quarter, according to the latest regulatory filing 13F with the Securities and Exchange Commission. Holdings are reported as of March 31, 2022. At that time, the S&P 500 was down about 5% for the year, compared to the end of May, when the index fell more than 17%.
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Berkshire gave its Chevron holdings a major boost in the quarter, increasing its stake from $4.5 billion at the end of 2021 to $25.9 billion at the end of March. The company is now one of Berkshire’s four largest holdings and offers a dividend yield of over 3%. Chevron took advantage of higher energy prices and reported a profit of $6.3 billion in the first quarter of 2022, compared to $1.4 billion in the same quarter last year.
Western Oil (OXY)
Berkshire began buying shares of Occidental Petroleum during the first quarter and has further increased its stake since the end of the quarter, according to regulatory filings. Berkshire held 136.4 million shares at the end of March and now owns about 143 million shares, giving the company a roughly 15% stake in the Texas-based oil and gas producer, worth approximately $9.7 billion. Berkshire also holds mandates that could further increase its position.
Citigroup (C), Ally Financial (ALLY) and Markel (MKL)
New stakes in three financial services companies have been reported by Berkshire: Citigroup, Markel and Ally Financial. Citigroup’s stake was worth nearly $3 billion at the end of March, while Markel’s and Ally’s stakes were worth $620 million and $390 million, respectively. Markel has sometimes been referred to as a mini-Berkshire due to its insurance operations and investment prowess.
Activision Blizzard (ATVI)
Berkshire also significantly increased its stake in video game maker Activision Blizzard, which agreed to be acquired by Microsoft for $95 per share in cash. Berkshire now owns 64.3 million shares, up from 14.7 million at the end of 2021. Buffett told Berkshire’s annual meeting this month that he increased the position as a bet of arbitration on the termination of the agreement. Activision recently traded for around $77 per share, and the companies expect the deal to close by mid-2023.
Berkshire’s largest shareholder base also received a boost in the quarter, with the company slightly increasing its stake in Apple by less than 1%. The position in the iPhone maker was worth nearly $160 billion at the end of the quarter, with Berkshire adding more than three million shares. Buffett touted Apple’s stock buybacks as a smart use of cash at Berkshire’s shareholder meeting last month.
HP Inc. (HPQ)
The company also disclosed its new position in HP, which makes computers and printers. Berkshire announced in early April that it had purchased nearly 121 million shares of HP, giving it a stake of more than 11% in the company. At the end of March, Berkshire held 104.5 million shares worth $3.8 billion.
Paramount Global (PARA)
Berkshire also established a new $2.6 billion position in Paramount Global, which operates film and television studios, cable networks such as MTV and Nickelodeon, and the CBS network. Berkshire held 68.9 million shares at the end of March.
Celanese Corp. (THIS)
Berkshire also bought a new $1.1 billion position in Celanese, a materials supplier to the chemicals, paints and coatings industries. Berkshire held about 7.9 million shares at the end of the quarter.
McKesson Corp. (MCK)
A new $894.5 million stake was disclosed by Berkshire in Texas-based McKesson, which is a distributor of pharmaceutical and medical supplies. The company also provides pharmaceutical services and technologies, as well as services for specialty practices.
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Verizon Communications (VZ)
Berkshire nearly exited its position in Verizon during the quarter, selling more than 99% of its shares and leaving its stake at around $70 million at the end of March. Berkshire first bought the telecommunications giant in the second half of 2020, but the stock has since declined. At the end of 2021, Verizon’s stake was worth $8.3 billion.
AbbVie (ABBV), Bristol-Myers Squibb (BMY) and Royalty Pharma (RPRX)
Berkshire also completely eliminated its stakes in drugmakers AbbVie and Bristol-Myers Squibb during the quarter. He also reduced his stake in Royalty Pharma by more than 80% after establishing the position less than a year ago. Berkshire owned about 1.5 million shares, worth $58.3 million at the end of March, according to the filing.
STORE Capital Corp. (STO)
Another place where Berkshire reduced its position during the quarter was STORE Capital, where it reduced its stake by almost 40%. The position was first bought in the second quarter of 2017 and was worth over $430 million at the end of March. The real estate investment trust, or REIT, currently has a dividend yield of over 5% and a market capitalization of $7.7 billion.
Wells Fargo (WFC)
Berkshire eliminated its stake in longtime holding company Wells Fargo, which had become just a $32.4 million position at the end of 2021. Berkshire had sold the bank steadily in recent years.
Top stocks held in Buffett’s portfolio
Berkshire takes a focused approach with its investments, typically holding the majority of its portfolio in just a few companies. Its top holdings shifted during the first quarter, with Chevron edging out Coca-Cola (KO) to enter the top four. These four companies accounted for approximately two-thirds of the portfolio’s value.
- Apple (AAPL) – $159.1 billion
- Bank of America (BAC) – $42.6 billion
- American Express (AXP) – $28.4 billion
- Chevron (CVX) – $25.9 billion
Buffett spent $3.2 billion buying back shares of Berkshire in the first quarter of 2022. This indicates he believes the shares are undervalued and remaining shareholders will benefit from the buybacks.
Buffett and Berkshire have an excellent track record when it comes to selecting investments, but be sure to research all investments thoroughly before investing yourself. Even stocks held by legendary investors are declining, and you’ll need to understand the companies you’re investing in well enough to make a buy, hold, or sell decision on your own.
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