Warren Buffett Continues to Sell Berkshire Hathaway’s Financial Holdings
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Berkshire Hathaway released its Q1 13F earlier this week, which showed that Warren Buffett continued to sell shares, especially in banking and financial companies. Here are the key takeaways from the conglomerate’s quarterly filing.
Berkshire did not disclose any new holdings in the quarter but revealed a secret position between $1 billion and $2 billion, which is likely a new company. Apart from that, the conglomerate added to stakes in Pool Corporation, Occidental Petroleum, Verisign, Constellation Brands, Domino’s Pizza, Sirius XM Holdings, and Heico-A.
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Berkshire Hathaway Added More Pool Corp. Shares
Overall, there were no real surprises here, and Berkshire has gradually been adding shares of Occidental Petroleum as it has the regulatory approvals to lift its stake to 50%. Also, Pool Corporation, Domino’s Pizza, and Constellation Brands are relatively new holdings, and typically Berkshire adds to stakes in subsequent quarters after the initial purchase. Among these purchases, Berkshire more than doubled its stake in Pool Corporation and Constellation Brands during Q1.
Berkshire Hathaway Exits Citigroup
Berkshire Hathaway trimmed stakes in Bank of America, DaVita Inc., Capital One Financial Corp, T-Mobile, Charter Communications, and Liberty Media, and completely exited Citigroup and Nu Holding. Citi was a relatively new position for Berkshire, and Buffett first bought a stake in Q1 2022 amid the company’s turnaround. However, the “Oracle of Omaha” sold shares in Q4 and eventually exited the name in Q1.
Warren Buffett Has Been Selling Financials for The Last Many Quarters
Notably, while Warren Buffett has historically had a flair for banking and financial companies, and the secret company where he was building a stake in 2023 turned out to be Zurich-based insurer Chubb, the Oracle of Omaha has sold stakes in many banks over the last couple of years.
These include Wells Fargo, where Berkshire once held a nearly 10% stake. Buffett also exited names like JPMorgan Chase and Goldman Sachs. Incidentally, while Buffett has held fat stakes in leading banks, he ensured that Berkshire’s stake remained below 10% to escape regulatory scrutiny.
However, he made an exception for Bank of America and increased Berkshire’s stake in the second-largest US bank beyond 10% after getting regulatory approval. However, the Oracle of Omaha has been gradually selling Berkshire’s stake in the bank.
Berkshire Has Net Sold Stocks for 10 Consecutive Quarters
Berkshire was a net seller of stocks in Q1, and the company sold shares worth $4.7 billion while its stock buying totaled only $3.2 billion. Q1 marked the tenth consecutive quarter when Buffett was a net seller of stocks and sold more shares than he bought.
Berkshire’s cash pile has been gradually rising and soared to a new record high of almost $348 billion at the end of March. The Warren Buffett-run company now owns nearly 5% of all outstanding U.S. Treasury bills as the nonagenarian hasn’t been able to find compelling opportunities to invest that cash.
During the annual meeting earlier this month, Buffett said that Berkshire was close to doing a $10 billion deal, but eventually held back. Buffett, however, downplayed the recent market volatility and said, “What has happened in the last 30, 45 days … is really nothing.”
Buffett said that over the last six decades, there have been three instances when Berkshire shares lost 50% in value and added, “I don’t get fearful by things that other people … are afraid of in a financial way.”
He emphasized, “Let’s say Berkshire went down 50% next week, I would regard that as a fantastic opportunity, and it wouldn’t bother me in the least.”
Buffett Announced His Retirement
Towards the end of the annual meeting, Buffett disclosed that he would retire as the company’s CEO and hand over the baton to Greg Abel.
Meanwhile, even though Buffett announced his retirement, he stressed that he did not intend to sell his stake in the conglomerate. I have no intention, zero, of selling one share of Berkshire Hathaway. It will get given away gradually,” said Buffett.
He added, “I would add this: The decision to keep every share is an economic decision, because I think the prospects of Berkshire will be better under Greg’s management than mine.”
“But I will come in, and there may come a time when we get a chance to invest a lot of money. When that time comes, I think it may be helpful with the board — the fact that they know I’ve got all my money in the company, and I think it’s smart, and I’ve seen what Greg has done,” said Buffett, reaffirming his faith in Abel’s leadership.
Abel, on his part, signaled continuity at the conglomerate that owns multiple businesses apart from stakes in publicly traded companies. “It’s really the investment philosophy and how Warren and the team have allocated capital for the past 60 years,” said Abel. He added, “Really, it will not change. And it’s the approach we’ll take as we go forward.”
Berkshire Performed Incredibly Well Under Buffett
Later in an interview, Buffett admitted that his decision was primarily due to the effects of aging. He observed a decline in his energy levels and overall efficiency, particularly when compared to his successor, Abel. He mentioned experiencing “heartbreaking moments” such as losing his balance, forgetting names, and struggling to read newspapers.
Meanwhile, Berkshire Hathaway has performed incredibly well under Buffett and achieved a compounded annual return of 19.9% from 1965 through 2024, which far exceeds the S&P 500 Index’s annual return of 10.4% over the same period.
