Berkshire Hathaway (BRK.A -0.52%) (BRK.B -0.26%), the massive conglomerate run by legendary investor Warren Buffett, released its long-awaited 13F filing on Monday afternoon, detailing the company’s portfolio moves from the third quarter of the year. We already knew from Berkshire’s latest earnings report that it bought nearly $9 billion in stock and sold $5.3 billion in the third quarter. But the 13F, which is required for large institutional investment managers, solves the mystery. We’ll take a look.
A key part of Apple’s business
Arguably Buffett and Berkshire’s most notable move during the quarter was their investment in the world’s largest chipmaker, Jaiwan semiconductor manufacturing company (TSM -1.40%)also known as TSMC. Berkshire purchased about 60.06 million shares of the company, for $4.1 billion at the time of purchase. This equates to an approximate 1.2% stake in the company.
TSMC is a powerhouse in its own right, but it’s also a key supplier for Apple. The consumer tech giant was TSMC’s biggest customer in 2021 and accounted for a quarter of the company’s revenue last year. This year, that number is expected to be even higher, although TSMC expects more room for growth in other sectors such as the automotive market.
Apple is also Berkshire’s largest stock by far, accounting for around 40% of a portfolio of stocks worth more than $300 billion. It is quite common for Berkshire to find stock through existing companies in which it operates or owns stock. For example, the company attributes its investment in the cloud storage company. Snowflake to the fact that his insurance brand Geico had been one of Snowflake’s customers for some time. We know Buffett and Berkshire really love Apple, so this investment makes perfect sense.
Seven other purchases and six sales
In addition to TSMC, Berkshire also bought shares in seven other companies, two of which were new additions to the portfolio.
The first is Louisiana-Pacific Corp. (LPX -1.80%), a materials supplier to the residential construction industry. The stock rose more than 10% in after-hours trading. Many homebuilders have struggled to source materials due to supply chain issues and are also facing higher construction expenses. Buying around 5.8 million shares for a stake of over $300 million can be a way to invest in the growth of the industry.
Berkshire also bought a very small stake – $12.8 million – in the investment bank Jefferies Financial Group (I F -1.76%), which rose 5% in after-hours trading. Investment banks have struggled this year due to a slowdown in equity and debt underwriting. But Jefferies thinks it’s gained market share recently and is trading at a pretty cheap valuation right now, just around tangible book value.
The other purchases of the quarter related to existing positions. Unsurprisingly, Berkshire continued to bet on US oil through its purchases of western oil (OXY -1.41%) and Chevron (CLC 0.05%) in the neighborhood. Berkshire increased its stake in Occidental by approximately 22.6%.
Berkshire has also significantly increased its stake in the major media company World Paramount (FOR -1.70%) more than 16% during the quarter. Finally, Berkshire increased its stake in the furniture company HR (HR -2.10%) and chemical company Celanese (THIS -5.03%) approximately 8.8% and 6%, respectively.
In addition to the purchase, Berkshire sold six shares during the quarter, including its entire position in the real estate investment trust STORE Capital (BIG), which should come as no surprise given that the company is being acquired. Berkshire has also significantly reduced its position in the long-term holding American bank (USB -2.38%) and actually continued to reduce this position after the third quarter, according to recent documents.
Other larger cuts Berkshire made during the quarter are at Bank of New York Mellon (BK -2.11%)which he reduced by about 14%, and the video game company ActivisionBlizzard (ATVI -0.24%), about 12% of its current position. Berkshire made minor changes to holdings Hooks (KR -0.60%) and General Engines (GM -2.89%).
Summary of all activity
Berkshire certainly made some moves in the third quarter, but less than it seems. The biggest decision was to buy a stake in TSMC and sell a large position in US Bancorp. Selling STORE Capital made sense, and buying more oil stocks has been a recurring theme this year.
Although Berkshire has made notable cuts, Buffett and the rest of the company may just be scaling the portfolio to prepare for a tougher economy in 2023. However, it will be worth watching if Berkshire ultimately decides to exit one altogether. assets. he sold, like US Bancorp, which would certainly be possible.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool holds and recommends Activision Blizzard, Apple, Berkshire Hathaway (B shares), Jefferies Financial Group Inc., STORE Capital, Snowflake Inc. and Taiwan Semiconductor Manufacturing. The Motley Fool recommends RH and recommends the following options: $200 long calls in January 2023 on Berkshire Hathaway (B shares), $120 long calls in March 2023 on Apple, short $200 puts in January 2023 on Berkshire Hathaway (B shares), short calls of $265 in January 2023 on Berkshire Hathaway (B shares) and short calls of $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.
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