Buffett, the stock god, has recently released his investment assignment. On February 14th Eastern Time, Buffett's Berkshire Hathaway disclosed its 13F statement to the Securities and Exchange Commission (SEC). As of the end of December last year, Berkshire's total holdings in the US stock market were approximately $347 billion, an increase of approximately $34 billion from $313 billion at the end of the third quarter last year.
The increase in Berkshire's holdings is closely related to the recovery of the US stock market in the fourth quarter of last year. The Nasdaq rose 13.56% in the fourth quarter of last year, the S&P 500 index rose 11.24%, the Dow rose 12.48%, and Berkshire's top heavy holdings, Apple, rose 12.60%. However, Apple has fallen more than 4% in the first quarter of this year, underperforming the US stock market.
Overall, in the fourth quarter of last year, Buffett increased his holdings by 3 stocks, decreased his holdings by 3 stocks, and also cleared his holdings of 4 stocks. There were no publicly disclosed new stocks. What are the hidden "mysteries" behind this "investment assignment"?
What is the reason for reducing holdings of apples?
Among the many investment actions in the fourth quarter of last year, Berkshire's reduction of 10 million shares of Apple, which is considered a "good idea", has attracted much attention. Based on the average stock price during the period, the market value of the reduction is about 1.822 billion US dollars (approximately 13.1 billion yuan), and the shareholding in Apple has decreased to 5.9%. After trading on February 14th, Apple fell 0.55%.
Many analysts believe that Berkshire's holding of Apple shares has already taken an excessive share in its investment portfolio. Previously, Apple's stock price continued to rise with the favorable trend of technology stocks, and Berkshire needed to explore the next growth opportunity.
Recently, Apple's stock price has not kept up with the pace of other large technology companies, losing its position as the "stock king" and giving way to Microsoft. Apple also faces a series of challenges, with the App Store facing regulatory scrutiny, declining sales in the Chinese market, and investors concerned about growth prospects. Some institutions have downgraded Apple's rating.
However, Apple remains Berkshire's largest holdings, with 906 million Apple shares valued at approximately $174 billion, accounting for 50.19%. In the short term, Berkshire still struggles to find a replacement for Apple. Buffett's love for Apple stocks is beyond words. At last year's shareholder meeting, Buffett stated that Apple has excellent business, high profit margins, high user loyalty, and close relationships with consumers. "Two years ago, Berkshire sold some Apple stocks due to tax considerations, and this decision was foolish. We want to have a good company, and we also want to have sufficient liquidity."
While reducing its holdings in Apple, Berkshire also reduced its holdings in Paramount Global by 32% and HP by 77%, respectively. HP dropped out of Berkshire's top ten holdings due to a significant reduction of approximately 80 million shares. In the spring of 2022, when Berkshire first purchased HP stock, its stock price was around $30 and closed at $28.58 on February 14th. Buffett's multiple holdings since the third quarter of last year have already incurred some losses.
Berkshire has also made some additional holdings, increasing its holdings of 15.8 million Chevron shares in the fourth quarter of last year, with a total investment of 126 million shares, valued at nearly $19 billion, making it the fifth largest holdings, reversing a series of previous quarters of holdings in Chevron. Berkshire also increased its holdings of 19.5866 million shares in Western Oil, with a market value of over 14.5 billion US dollars, ranking sixth in terms of holdings.
In addition, Berkshire cleared stocks of home builder DR Horton, insurance company Globe Life, insurance and investment company Mark, and Brazilian credit card processing company StoneCo last quarter.
Brewing a big game of chess?
Despite Berkshire's significant reduction in its holdings of Apple in the fourth quarter of last year, there has not been much change in its top ten holdings. In the fourth quarter of last year, Buffett continued his stable investment style, with the top ten heavily held stocks accounting for 92.92%, most of which were still veteran investors, including Apple, Bank of America, American Express, Coca Cola, Chevron, Western Oil, Kraft Heinz, Moody's, Davita Health, and Huaqi.
However, based on a series of signs, Buffett may be brewing a big game. Berkshire has obtained permission from the SEC for two consecutive quarters to temporarily keep one or more of its holdings confidential, leading investors to speculate that Buffett may be making a significant new investment.
According to the Q3 10Q document released in November last year, Berkshire hinted that the secret investment may involve banks, financial companies, or insurance companies. Berkshire recently spent $1.2 billion to purchase financial stocks, but has not yet disclosed the specific whereabouts of the money.
When Berkshire makes large-scale investments, it will file a confidentiality request with the SEC and does not want other investors to flock to buy before completing the purchase. This type of confidentiality request is relatively rare for Berkshire, as it last purchased Chevron and Verizon in 2020.
In recent years, Buffett has rarely seen large trading opportunities, and Berkshire's total cash has also been steadily increasing. As of the end of September 2023, Berkshire's total cash reached a historic high of $157.2 billion, surpassing the $149.2 billion high set in the third quarter of 2021. Given that Berkshire still has over $100 billion in cash on its books, how Buffett can make good use of this considerable surplus has become an urgent issue to face.