Berkshire Hathaway Inc is a holding company that constantly seeks to buy large, but non-controlling, positions in publicly-traded companies that meet its standards. When folks think of the Berkshire Hathaway portfolio and its collection of holdings, most of which were selected by Chairman and CEO Warren Buffett, the companies that most readily come to mind are probably American Express (AXP), Coca-Cola (KO) and, more recently, Apple (AAPL). But a deep dive into Berkshire Hathaway's equity holdings reveals a more complicated picture. In this report, we will analyze 15 interesting investments of Berkshire Hathaway and share some major insight.
Apple
Shares held: 245,155,56
Percent of portfolio: 29.74%
Berkshire Hathaway has bought shares of Apple in early 2016 for the first time, and the iPhone maker has since become Berkshire Hathaway's single-largest holding. AAPL accounts more than a quarter of the total value of Berkshire Hathaway's equity portfolio. Unlike many of Berkshire Hathaway's holdings, Buffett has been happy to discuss his ardor for Apple. As he has said more than once on CNBC, he loves the power of Apple's brand and its ecosystem of products (such as the iPhone and iPad) and services (such as Apple Pay and iTunes). In 2018 Berkshire Hathaway has invested $13,5 billion in Apple again and paid $177 per share. It is also important to mention that Berkshire Hathaway sold about 1.5% of its Apple shares in the fourth quarter of 2019, which amounted to about $800 million. While the amount of money seems like a lot, it's a very small portion of Berkshire Hathaway's investment and total portfolio, meaning the change was likely a rebalancing move.
Amazon.com (AMZN)
Shares held: 537,300
Percent of portfolio: 0.41%
Berkshire started buying stock in the cloud-computing and e-commerce giant in the first quarter of 2019. The company bought 483,300 shares of Amazon at the time. But Berkshire owned 537,300 shares as of the end of its fourth quarter, according to the holding company's most recent filing with the Securities and Exchange Commission. This means Berkshire added 54,000 shares to its Amazon holding. Berkshire Hathaway has paid between $1600-$1800 per share during this period.
Bank of America
Shares held: 925,008,600
Percent of portfolio: 13.45%
Buffett said he dreamed up the Bank of America deal from his bathtub, drawing up a plan to invest $5 billion into Bank of America preferred stock in 2011 as the European Debt Crisis rattled the markets. Many investors believed that Bank of America was soon to be insolvent, fearing that outsized losses from Countrywide acquisition and European market jitters would cripple the bank. Berkshire's preferred stock investment gave Bank of America fresh capital, in addition to much-needed credibility. The company slowly worked through crisis-era fines that tallied to more than $91 billion, and has since emerged as a very profitable banking institution. Less than six years after inking the deal, Berkshire Hathaway will become the bank's largest shareholder when it converts its warrants it received with the preferred stock investment into common stock. Berkshire's investment proved well-timed, earning the company more than $12 billion of gains on the initial investment of just $5 billion. Warren Buffett last added to Berkshire Hathaway's stake in BAC in the second quarter of 2019, the price of BAC has been between $27-$35 per share during this period. Berkshire is Bank of America's largest shareholder, at 10.7 % of its shares outstanding.
Coca-Cola Co. (KO)
Shares held: 400,000,000
Percent of portfolio: 9.14%
Coca-Cola is the largest and most valuable soda brand in the world, capturing half of the global carbonated soft drink market and 43% of the U.S. market. Coca-Cola is a truly global company, generating more than 70% of its profits outside the U.S. Top brands include Coca-Cola Classic, Sprite, Fanta and Minute Maid. Buffett has been a longtime fan of Coca-Cola, first investing in the stock in 1987. Since that time, KO stock is up nearly 2,000%. Berkshire is KO's largest shareholder with 9.4% of its shares outstanding. According to the latest reports from Berkshire Hathaway, the fund didn't invest in KO in 2019 and 2020.
Biogen - New Purchase
Shares held: 648,447
Percent of portfolio: 0.07%
In February, Berkshire released its fourth-quarter stock picks, which included a $192.41 million stake in Biogen. In addition, Biogen has around 25 other drug candidates in its pipeline, indicating potential options for future blockbusters. What also makes Biogen a prudent pick is that it's somewhat recession-resistant. After all, people with multiple sclerosis aren't going to go without their medicine just because the economy is in a downturn. That, combined with several options for new blockbusters in the pipeline, presented Berkshire with a low-risk, high-potential-upside scenario that likely appealed to Berkshire's investment officers. Purchase prices were between $220.06 and $304.07, with an estimated average price of $279.04 per share.
General Motors Co. (GM)
Shares held: 75,000,000
Percent of portfolio: 1.13%
Warren Buffett first took a stake in General Motors, the world's fourth-largest auto manufacturer by production, in early 2012. Berkshire Hathaway increased its position by 37% in 2018 and by 4% in 2019. General Motors is one of the world’s largest automakers, selling nearly 8 million vehicles per year. GM has a rocky past, and signs suggest the current U.S. auto boom may have peaked. Fortunately, GM’s last restructuring in 2009 eliminated many of its legacy balance sheet issues, and the company is now profitable. GM is refocusing its business on trucks and SUVs and is also investing heavily in electric and autonomous vehicle technology. With 75 million shares, Berkshire Hathaway is General Motors' fifth-largest investor, holding more than 5% of the car company's shares outstanding. Buffett paid an estimated average price per share of $31.82 when he initiated his position in the first quarter of 2012.
United Parcel Service
Shares held: 59,400
Percent of portfolio: 0.003%
United Parcel Service might be the world's biggest package delivery company, but it's immaterial when it comes to Berkshire Hathaway's portfolio. With fewer than 60,000 shares, this is the most meager of Buffett stocks - a rump position, leftovers, an odd lot. Buffett first invested in UPS in the first quarter of 2006, when he picked up 1.43 million shares worth about $113.5 million. That comes to an average price per share of $79.38. UPS never was a major part of Berkshire's portfolio, and Buffett has pared the position over the years to where it wouldn't be a surprise if he exited the stake at any time.
Suncor Energy
Shares held: 15,019,031
Percent of portfolio: 0.20%
Warren Buffett made a move in the energy sector by initiating a position in Suncor Energy in the fourth quarter of 2018. And it's a rarity among Buffett stocks, as it's not U.S.-based. If this bet on Canada's biggest oil and gas company sounds familiar, it should: This is the second time Berkshire Hathaway has taken a stab at Suncor. The company originally invested in the energy giant in 2013, then sold the entirety of the position three years later. Suncor - an integrated energy giant whose operations span oil sands developments, offshore oil production, biofuels and even wind energy - also sells its refined fuel via a network of more than 1,500 Petro-Canada stations. Berkshire owned 15,019,031 shares as of the end of the 2019 year, according to the holding company's most recent filing with the Securities and Exchange Commission. This means Berkshire added around 5,000 new shares to its Suncor holding from 2018 year. Berkshire Hathaway has paid between $28-$33 per share during this period.
Occidental Petroleum Corp
Berkshire Hathaway bought $10 billion worth of Occidental’s preferred shares in 2019 to help finance its $38 billion acquisition of Anadarko Petroleum. The deal was a bet on rising shale oil prices months ahead of the worst price crash in decades, and saddled Occidental with a huge debt load at a time when there are few buyers for assets to offset the acquisition cost. Purchase prices were between $37.34 and $44.23, with an estimated average price of $39.98.
The Kroger Co - New Purchase
Berkshire Hathaway initiated holdings in The Kroger Co. His purchase prices were between $23.84 and $29.1, with an estimated average price of $26.57. The impact to his portfolio due to this purchase was 0.23%. His holdings were 18,940,079 shares as of the end of 2019Q4.
Vanguard S&P 500 (VOO) - New Purchase
Berkshire Hathaway initiated holdings in Vanguard S&P 500. His purchase prices were between $264.57 and $296.67, with an estimated average price of $283.37. The impact to his portfolio due to this purchase was 0.01%. His holdings were 43,000 shares as of the end of 2019Q4.
SPDR S&P 500 (SPY) - New Purchase
Berkshire Hathaway initiated holdings in SPDR S&P 500. His purchase prices were between $288.06 and $322.94, with an estimated average price of $308.48. The impact to his portfolio due to this purchase was 0.01%. His holdings were 39,400 shares as of the end of 2019Q4.
RH (NYSE:RH)
Berkshire Hathaway added to his holdings in RH by 41.44%. His purchase prices were between $164.95 and $241.97, with an estimated average price of $196.16. The impact to his portfolio due to this purchase was 0.04%. His holdings were 1,708,348 shares as of the end of 2019Q4.
Delta Air Lines
Shares held: 70,910,456
Percent of portfolio: 1.84%
And from the looks of things, Delta Air Lines, which was part of the group of air carriers Berkshire Hathaway first picked up in the third quarter of 2016. Berkshire Hathaway raised its stake in DAL by 8%, or 5.4 million shares, during the first quarter of 2019. Indeed, the holding company is now Delta's largest shareholder, owning 10.8% of the carrier's shares outstanding. Buffett explained to CNBC that Berkshire crossed the 10% threshold because Delta bought back so much of its own stock. Purchase prices were between $23.84 and $29.1
Bank of New York Mellon
Shares held: 79,765,057
Percent of portfolio: 1.6%
Despite its impressive-sounding moniker, Bank of New York Mellon is not exactly a household name. But it's a big deal in financial services, and Warren Buffett has been a fan for some time. Bank of New York Mellon is a custodian bank that holds assets for institutional clients and provides back-end accounting services. Its roots actually go all the way back to 1784, when Bank of New York was founded by a group including Alexander Hamilton and Aaron Burr. Today, BK is the nation's ninth-largest bank by assets, according to data from the Federal Reserve. Berkshire Hathaway first took a position in BK back in the third quarter of 2010, when it paid an estimated average price of $43.90. Warren Buffett last added to Berkshire's stake in BK in the fourth quarter of 2018 when he increased his holding company's investment by 3%, or more than 3 million shares.
Summary
As of 2019Q4, Berkshire Hathaway owns 52 stocks with a total value of $242.1 billion. These are the details of the recent buys and sells.
- New Purchases: KR, BIIB, SPY, VOO,
- Added Positions: OXY, SU, GM, RH,
- Reduced Positions: WFC, GS, TRV, AAPL, PSX, AAL, BK
- Berkshire Hathaway reduced to his holdings in Phillips 66 by 95.61%. His sale prices were between $98.24 and $119.7, with an estimated average price of $112.57
- Berkshire Hathaway reduced to his holdings in The Travelers Companies Inc by 94.76%. His sale prices were between $128.93 and $144.96, with an estimated average price of $135.98
- Berkshire Hathaway reduced to his holdings in Goldman Sachs Group Inc by 34.59%. His sale prices were between $196.85 and $231.21, with an estimated average price of $217.51
- Berkshire Hathaway reduced to his holdings in Wells Fargo & Co by 14.58%. His sale prices were between $47.82 and $54.46, with an estimated average price of $52.48