Warren Buffett’s Berkshire Hathaway 4Q22 net sale of $10bn

The time has come for most funds to disclose their latest quarter purchases/sales and there is none more closely monitored than Warren Buffett’s Berkshire Hathaway transactions. Given a large war chest of approx. US100+bn, is the Oracle of Omaha finally going “All-in” in an improving market?

Well, that is not the case. Berkshire Hathaway made more sales than purchases in the final quarter of 2022, according to data taken from dataroma, one of my favorite websites to track the purchases/sales of superinvestors, such as Warren Buffett.

According to Dataroma, Berkshire Hathaway’s 4Q22 purchases only consist of 3 stocks, and none of them are new purchases. Here are the details of the 3 purchases:

1. Apple Inc. (AAPL)– Increase by 0.04% (333,856 shares) at a reported cost of $129.93 for a total purchase consideration of US43.4m
2. Paramount Global (PARA)– Increase by 2.65% (2,420,679 shares) at a reported cost of $16.88 for a total purchase consideration of US40.9m
3. Louisiana Pacific Corp (LPX)– Increase by 21.55% (1,249,003 shares) at a reported cost of $59.20 for a total purchase consideration of US73.9m

The total purchases only amounted to approx. US158.2m, a tiny fraction of its US100+bn cash hoard. Warren Buffett actually added to its growing cash reserves through numerous sales made this latest quarter.

Here are the details of Berkshire Hathaway’s 4Q22 sales:

1. Chevron Corp (CVX)– Decrease by 1.44% (2,383,547 shares) at a reported sales price of $179.49 for a total sales consideration of US427.8m
2. Activision Blizzard (ATVI)– Decrease by 12.35% (7,424,791 shares) at a reported sales price of $76.55 for a total sales consideration of US568.4m
3. Kroger (KR)– Decrease by 0.53% (268,823 shares) at a reported sales price of $44.58 for a total sales consideration of US12m
4. Bank of New York Mellon (BK)– Decrease by 59.7% (37,141,011 shares) at a reported sales price of $45.52 for a total sales consideration of US1.69bn
5. Mckesson Corp (MCK)– Decrease by 10.72% (342,830 shares) at a reported sales price of $375.12 for a total sales consideration of US128.6m
6. Ally Financial (ALLY)– Decrease by 0.67% (200,000 shares) at a reported sales price of $24.45 for a total sales consideration of US4.89m
7. Taiwan Semiconductor (TSM)– Decrease by 86.19% (51,768,156 shares) at a reported sales price of $74.49 for a total sales consideration of US3.86bn
8. US Bancorp (USB)– Decrease by 91.42% (71,117,379 shares) at a reported sales price of $43.61 for a total sales consideration of US3.1bn

Total Sales consideration = approx. US9.8bn

Net Sales = US9.8bn – US0.158bn = US9.642bn

Berkshire Hathaway just added another US9.64bn from the net sale of its stocks, further boosting its cash hoard by close to 10%.

Is this a sign that the Oracle of Omaha is getting fearful once again?

The sale of TSM is likely a surprise

The sale of Taiwan Semiconductor (TSM) likely came as a surprise since many investors assumed that Warren Buffett has the intention to establish a long-term holding in the semiconductor.

The sale of TSM at a reported price of $74.49 resulted in a small profit of $5.93/share based on its purchase cost of $68.56.

Berkshire’s sale of TSM likely missed out on the substantial rally of the counter YTD 2023, with the counter currently at US$98/share as of 14 Feb 2023. The counter is down almost 4.5% after-market as a result of the news of Berkshire’s sale.

Financials the other major sales

Other major sales in 4Q22 were the financial names, with the sales consideration from both BK and USB amounting to almost US4.8bn. Berkshire has been an active seller of bank stocks in recent years, eliminating holdings in JP Morgan (JPM), Goldman Sachs (GS), and Wells Fargo (WFC).

The sale of both BK and USB resulted in Berkshire leaving more than US$10bn on the table given the rally in the stocks since their sales.

Most superinvestors were selling in 4Q22

Source: Dataroma

According to dataroma, most superinvestors were net sellers in the latest quarters, with the healthcare sector witnessing the greatest reduction in the number of holdings by superinvestors.

Materials, Industrial Goods and Consumer Cyclicals are the 3 sectors that see positive share adds by superinvestors in 4Q22.

The most popular stock which superinvestors added to their portfolio in 4Q22 was Disney, followed by Amazon and Meta rounding the top 3 purchases by superinvestors in 4Q22

The Top 3 sales on the other end were Resolute Forest Products, Netflix, and GEO Group

Most popular sectors and stocks as of end-2022

Source: Dataroma

Financials remain the sector which superinvestors are most positive on as of end-2022, with the greatest number of stock holdings and the largest sector % vs. total holdings.

In terms of stocks, Microsoft is the most popular stock to own among superinvestors with an ownership count of 30 superinvestors investing in the counter. As a % of the grand portfolio of all the superinvestors tracked by dataroma combined, it consists of 2.332%.

The Top 5 holdings as a % of superinvestors’ grand portfolio are:

1. Microsoft (2.332%)
2. Berkshire Hathaway (2.097%)
3. Alphabet (1.972%)
4. Micron Technology (1.655%)
5. Amazon.com (1.602%)

Tracking superinvestors’ purchases

Tracking superinvestors’ purchases can be a quick way to get some insights on what these top fund managers might be bullish or bearish on. While the information might be slightly dated, for less actively traded funds such as Berkshire Hathaway, it could provide useful insights on the current state of the market as well as its long-term view of stocks in its portfolio.

Of course, even the great investing legend Warren Buffett could be wrong in the short term. Nonetheless, it remains a good data point, particularly for new investors to “take guidance” from these top fund managers.

To read more of such articles, do head over to New Academy of Finance.

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