The 13F filing gives us a quarterly opportunity to observe what Warren Buffett and his investment … [+] team of Todd Combs and Ted Weschler are doing within Berkshire Hathaway’s publicly traded equity portfolio. (Photo by: David A. Grogan/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images)
Berkshire Hathaway’s (BRK/A, BRK/B) second-quarter 13F was filed after the market closed on August 14. This filing gives us a quarterly opportunity to observe what Warren Buffett and his investment team of Todd Combs and Ted Weschler are doing within Berkshire’s publicly traded equity portfolio. Berkshire has a large stable of wholly-owned entities, so this is just a slice of their investments. Berkshire’s second-quarter earnings were recently reported, containing significant information about the extensive portfolio of wholly-owned operating companies. A summary of the second-quarter earnings report is available here.
Berkshire’s $280 billion investment portfolio consists of 41 companies, unchanged from last quarter. Berkshire was a net seller of publicly traded stocks during the quarter. The top five holdings, in order of the size of holding, are Apple (AAPL), Bank of America (BAC), American Express (AXP), Coca-Cola (KO), and Chevron (CVX). The top 5 holdings account for over 73% of the total portfolio, down from 76%. Notably, despite the large sale of Apple, the investment portfolio remains very concentrated, with over 90% of assets in the top ten holdings.
Percent Of Berkshire 13F Portfolio
Though the news was already known from the earnings disclosures, the most pivotal information was that Berkshire Hathaway sold about $70 billion of its massive stake in Apple (AAPL) in the second quarter after paring it by $20 billion in the first quarter. Before the initial sale, Apple stock comprised over 50% of its publicly traded portfolio but is now at around 30%. The news came as a shock since Buffett said at the annual meeting that Apple is an even better business than the long-held Berkshire holdings of American Express (AXP) and Coca-Cola (KO).
Interestingly, Berkshire trimmed its Capital One Financial (COF) holdings, which was a new addition to the portfolio in the second quarter of 2023. Though not included in this filing, Berkshire sold about $3.8 billion of Bank of America (BAC) starting in July. Warren Buffett is regarded as one of the greatest bank stock investors ever, so the reduction in exposure to the banking sector is notable.
Berkshire continued to add to its sizable position in Chubb (CB), the most substantial disclosure in the first quarter 13F report. The Securities and Exchange Commission allowed Buffett to keep the holding confidential since the third quarter of 2023 while amassing the position. The $6.9 billion Chubb position is the ninth largest holding in the publicly traded portfolio at 2.5% of the total. Berkshire is the third largest shareholder at 6.7% of Chubb’s outstanding shares. A deeper analysis of the probable reasons behind the Chubb purchase can be found here.
Berkshire initiated two new stock positions this quarter: Ulta Beauty (ULTA) and HEICO Corporation – Class A (HEI/A). Ulta is a retailer selling beauty products, and its stock is down over 20% year-to-date. HEICO makes and sells aerospace products and provides aerospace services to the airlines and defense. Notably, Berkshire has several wholly-owned companies in the aerospace segment, and the recent earnings report highlights the strength of those businesses. Though one cannot know for sure, the current size of the positions points to Combs or Weschler as the likely source.
Because the 13F does not include international stocks, Berkshire Hathaway initially announced the acquisition of about 5% of five Japanese trading companies at the end of August 2020. These holdings are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd., and Sumitomo Corp. Buffett revealed in April 2023 that Berkshire increased its stakes in these companies to 7.4%. Buffett indicated that these were intended to be long-term holdings, and Berkshire may still increase its stake to 9.9%.
In addition to purchasing more Chubb shares, Berkshire added to Occidental Petroleum (OXY), Liberty Media – SiriusXM Class C (LSXMK), Liberty Media – SiriusXM Class A (LSXMA), and Sirius XM Holdings (SIRI).
Snowflake (SNOW) and Paramount Global (PARA) were eliminated from the portfolio in the quarter. While most of the exit from Paramount Global was complete at the end of the first quarter, the small remainder was sold in the second quarter. Buffett said at the annual meeting that the position had been eliminated. He noted that it was one hundred percent his decision to buy the Paramount stock initially and that “we lost quite a bit of money.”
As noted previously, Berkshire reduced its Apple (AAPL) and Capital One Financial (COF) holdings. In addition, Chevron (CVX), Louisiana-Pacific (LPX), T-Mobile US (TMUS), Liberty Media – Liberty Live Class C (LLYVK), Liberty Media – Liberty Live Class A (LLYVA), and Floor & Decor Holdings (FND) were trimmed. Chevron had been cut in several past quarters as Berkshire built its Occidental stake. Despite the sales, Chevron has remained Berkshire’s fifth-largest publicly traded holding, worth over $18 billion.
Berkshire Hathaway: Cash-To-Total Assets
Berkshire was again a net seller of stocks in its portfolio, with net sales of over $75 billion in publicly traded stocks during the quarter. Between being a net seller of stocks for seven quarters in a row and the cash generated from Berkshire’s businesses, the company has amassed a record level of cash and equivalents of over $271 billion. Perhaps more tellingly, the cash stockpile relative to the size of Berkshire Hathaway is at 25%, the highest level since at least 1990. Buffett said at the annual meeting that there were no significant opportunities to invest the cash at attractive expected return: “I don’t think anyone sitting at this table has any idea how to use it effectively, and therefore we don’t use it.” His opinion doesn’t seem to have changed, and the level of cash appears to indicate that he is actively reducing risk.
