Using Warren Buffett’s SEC Filing as an Oracle

2/23/2022

Markets

0 min read

It’s Officially Warren Buffett Season – Hints on What to Expect

Berkshire Hathaway’s annual report is set to be released Saturday, February 26^th.As is customary, it will be accompanied by the famous CEO, Warren Buffett’s Letter to Shareholders. Using past years as an indicator, investors can expect a lot of news and views surrounding the report and letter. For the next two months, investors can expect more media interviews with Buffett or Berkshire’s number two man Charlie Munger. These all have the potential to move stocks and even crypto prices. The Berkshire Hathaway annual meeting will be in person this year on April 30^th. The presentations will be viewable live on Yahoo Finance.

As investors enter “Buffett season” the time of year when Warren Buffett, one of the most recognized and highly successful investors, shares his thoughts and wisdom related to current markets, an early read of Berkshire’s actions can be helpful for investors – and we just received one. Berkshire Hathaway’s (BRK/A, BRK/B) fourth-quarter 13F of all public market transactions was just filed last week. Below we highlight some of the more notable shifts in the company’s portfolio, these changes may provide an early read on presentations at the annual meeting.

Using
Berkshires 13F as an Oracle

Berkshire Hathaway’s fourth-quarter 13F was filed on February 14. There are two new names of publicly-traded companies in the portfolio. The combined equity securities of Berkshire’s portfolio represent a fraction of company assets since Berkshire wholly owns large brand name companies such as Fruit of the Loom, Geico, and Duracell. The filing shows Berkshire’s $331 billion investment portfolio consists of 44 companies, one company more than the previous quarter.

The top 5 holdings account for over 79% of the total securities portfolio. These include Apple (AAPL), Bank of America (BAC), American Express (AXP), Coca-Cola (KO), and Kraft Heinz (KHC). The significant holdings in Apple, Bank of America, and American Express cause the portfolio, relative to the S&P 500 Index to be more highly weighted in technology, staples, and the financial sector.

Overall, the total securities portfolio carries a slightly more expensive valuation than the S&P 500 while having achieved higher profitability (ROE) and exhibiting lower debt ratios and higher credit ratings.

In the quarter, there were two new additions: Activision Blizzard (ATVI) and Liberty Media – Formula One (FWONK). Microsoft announced a deal to buy ATVI for $95.00 per share in cash on January 18, 2022. Berkshire also added a position of Nu Holdings (NU), which it backed before the firm became public late last year.

Berkshire added to its position in Chevron (CVX), Liberty Media – Liberty SiriusXM (LSXMA), RH (RH), Floor & Decor-A (FND). FND was a new purchase in the last quarter, with the position increased this quarter. The CVX holding was also increased in the third quarter. RH was last increased in the second quarter of 2021.

Reduced can be seen in Berkshire’s holdings of Kroger (KR), Charter Communications (CHTR), Visa (V), Mastercard (MA), Abbvie (ABBV), Royalty Pharma (RPRX), Bristol-Myers Squibb (BMY), and Marsh & McClennan (MMC). Many of the pharmaceuticals being reduced were added in the first half of 2020 and served the portfolio well. The reduced credit card positions began in the third quarter of 2021, with Berkshire previously trimming its positions in V and MA back in the second quarter of 2020.

Teva Pharmaceutical (TEVA) and Sirius XM Holdings (SIRI) were eliminated from the portfolio in the fourth quarter.

Take-Away

Individual stocks can make big moves with just a small utterance from highly-followed investors. Warren Buffett is the ultimate “highly-followed” investor. Over the upcoming days and weeks investors will be treated to more than just utterances.

All of this comes at a time when the investment climate is shifting. Sign-up for Channelchek to receive emails containing research and articles to help provide actionable ideas for your portfolio.

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