Berkshire Hathaway‘s (NYSE: BRK-A) (NYSE: BRK-B) stock portfolio is perhaps the most closely followed in the world, but we only get an updated look at its holdings every three months. The portfolio has more than $200 billion worth of common stocks in it, most of which Warren Buffett himself selected.
The SEC requires Berkshire, along with all institutional investment managers with more than $100 million in assets under management, to report a snapshot of its portfolio at the end of each quarter. This time we get a glimpse of how the portfolio looked on March 31. While Berkshire was a net buyer of stocks for the quarter, there were purchases as well as sales that took place. Here’s a rundown of the changes to Berkshire’s portfolio during the first quarter, and the key points investors need to know.
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What Berkshire Hathaway bought during the first quarter
This wasn’t Berkshire’s most active quarter in terms of stock buys, but there were still a few significant moves.
In short, there weren’t a ton of surprises. Arguably the most significant move, the addition of Amazon to Berkshire’s portfolio, was revealed ahead of the company’s annual meeting earlier this month. It’s important to point out that Buffett did not personally buy Amazon — that purchase was made by one of Buffett’s two stock-pickers, Ted Weschler or Todd Combs.
Elsewhere in Berkshire’s portfolio, the company continued building a stake in JPMorgan Chase. Berkshire’s $6 billion position represents just 1.7% of the banking giant, so it wouldn’t be surprising to see it grow in the future. And while the Red Hat stake grew significantly, it’s important to point out that this is probably an arbitrage play, as IBM (NYSE: IBM) is set to acquire the company.
What Berkshire Hathaway sold
Here are the important takeaways here. Don’t read much into the Wells Fargo sale. Berkshire has been slowly selling Wells Fargo stock for some time, not because Buffett has lost faith in the bank, but because Berkshire wants to keep its stake under 10% for regulatory reasons. I also wouldn’t read too much into the Southwest Airlines sale. Berkshire owns shares of all four major U.S. airlines, and there’s been some slight shuffling in position sizes in recent quarters.
Charter and Phillips 66 are the two most significant sales. Charter is still a pretty large position, worth about $2 billion, but it looks as if Berkshire could be cashing in some of its chips, as the stock has more than doubled since Berkshire first bought shares in 2014. And the Phillips 66 stake has been reduced several times recently and is now one of Berkshire’s smaller investments. Given the rapid reduction, it wouldn’t be surprising to see Berkshire sell the rest of its shares.
One other buy
There was one more transaction that wasn’t listed on Berkshire’s 13F — it’s important to point out that one of Berkshire’s most significant stock purchases for the quarter was the $1.7 billion it spent buying back its own stock.
If you aren’t familiar, Berkshire modified its buyback program in mid-2018, allowing for virtually unlimited buybacks whenever Buffett and Vice Chairman Charlie Munger agree that the stock trades for a discount to its intrinsic value. And the first-quarter 2019 buyback total is more than the third and fourth quarters of 2018 combined. So it’s fair to say that Berkshire’s management sees lost of value in Berkshire itself.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew Frankel, CFP owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Delta Air Lines, and Southwest Airlines. The Motley Fool is short shares of IBM. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.