Berkshire Hathaway, the investment holding company of stock market legend Warren Buffett, also recently disclosed its holdings in the third quarter of 2023 as part of Form 13F. There were more sales than purchases and a record high cash balance. But Buffett is apparently secretly working on building a new stock position, as he asked the SEC not to publicly name one or more holdings.
• Warren Buffett a net seller of stocks so far in 2023
• Form 13F: Buffett asked SEC to keep one or more stocks confidential
• Cost basis of Berkshire Hathaway’s financial stocks recently increased
Stock market legend Warren Buffett has emphasized several times in recent years that it is currently difficult for his investment holding company Berkshire Hathaway to find good companies that are appropriately valued and large enough for investment. This is also reflected in the investment company’s third quarter data. According to Business Insider, Berkshire Hathaway only spent $1.7 billion on stock purchases in the third quarter, but at the same time sold securities worth a whopping $7 billion. The company’s cash balance grew from $147.4 billion in the previous quarter to $157.2 billion, reaching a new record, according to Yahoo Finance. Warren Buffett and his holding company will also be a net seller of stocks throughout 2023 – meaning he sold more shares than he bought – while in 2022 it was the other way around.
Warren Buffett recently cleaned up the Berkshire portfolio a lot
As “Yahoo Finance” reports, the so-called Oracle of Omaha justified this fact by “removing the remains” of some old stocks. But the famous investor also lent a hand to some prominent positions. In the third quarter, Buffett and Berkshire Vice President Charlie Munger completely threw shares from Procter & Gamble, General Motors, UPS, Mondelez and Johnson & Johnson, among others, out of the investment company’s portfolio. Other holdings, such as those in the oil company Chevron or the IT group HP, were significantly reduced. However, none of the existing positions were increased, although according to a publicly available 13F form, shares from SiriusXM, Atlanta Braves and Liberty Media were added to the Berkshire portfolio.
Analyst Greggory Warren from the financial company Morningstar viewed Warren Buffett’s behavior towards “Yahoo Finance” as a sign of patience. “Discipline has prevented Berkshire from making big mistakes. Their cash balance is where it is now because they haven’t made many stupid decisions over time,” he said. “The message is: Be careful. I think he sees problems for next year,” Lee Munson from asset manager Portfolio Wealth also told the news portal. According to Munson, Buffett simply “doesn’t see any great deals” at the moment. But that doesn’t seem to be entirely true. Because Buffett apparently found a great deal in the past quarter, but doesn’t want to share it with the public yet.
Buffett wants to keep his new investment secret
According to Investing.com, Berkshire Hathaway asked the US Securities and Exchange Commission not to disclose one or more holdings when it filed its mandatory Form 13F. “The manager has omitted from this public Form 13F one or more holdings for which confidential treatment has been requested from the U.S. Securities and Exchange Commission pursuant to Section 13(f) of the Exchange Act and Rule 24b-2,” the agency said, according to ” Investing.com”. This approach is not new for Warren Buffett. He had already agreed to secrecy with the SEC in 2020 while he built up stakes in Chevron and Verizon.
In the current case, “Barron’s” assumes that Buffett began building up the new position in the third quarter of 2023, but that it has not yet been completed. The secrecy of the new investment now serves to be able to complete the share purchases in the current quarter in peace, without the price of the company’s shares being driven up by Buffett fans who want to imitate his steps. The financial portal expects a resolution as to which company is involved in the currently secret Buffett bet either with the next 13F form for the fourth quarter of 2023 or beforehand as part of a mandatory notification if Berkshire Hathaway meets the reporting threshold of five for its investment percent exceeds.
Evidence of Berkshire Hathaway’s new involvement in the financial industry
Even if it is currently not known what Buffett’s secret trade is and whether it involves one or more companies, evidence from the quarterly report Form 10-Q still points in a certain direction. Because as “Barron’s” reports, the 10-Q form shows that Berkshire Hathaway’s cost base of financial stocks increased by $1.2 billion in the third quarter. However, it fell for other groups of stocks. However, the 13F form shows that the investment holding company has not increased any of its existing positions in the financial sector. According to the news site, the changes in the cost base must have been caused by a new position from this sector. An unnamed analyst from the financial services provider Edward Jones also expressed the opinion to “Investing.com” that Warren Buffett had probably added a new financial stock to his portfolio. However, when it comes to the question of which company this could be, the assessments vary – although the selection is no longer that huge given the many financial stocks that are already in Berkshire’s portfolio.
While “Barron’s” assumes that Berkshire is currently investing in a “financial company from the top 25 by market value”, the Edward Jones analyst believes that smaller companies in the industry could also be considered. However, both expect that the position they have built up will be worth up to four or five billion US dollars. According to Barron’s, the most likely candidates – if it is only a single investment – are the US investment bank Morgan Stanley, the fund provider BlackRock or the insurance company Chubb. The Edward Jones analyst, however, threw the US investment house Goldman Sachs, the financial service provider Charles Schwab and the insurer AIG into the ring compared to “Investing.com”. The latter is already a reinsurance partner of Berkshire and an investment is therefore more likely than with Chubb, according to the expert. Until Warren Buffett reveals the secret behind his latest investment, it will all remain just speculation.
Editorial team finanzen.net
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