Warren Buffett sold 7 stocks. Follow ? Part 2 !
Reflecting publicly.
I am still very much puzzled why my March 2024 posts saw reduced footfall?
In fact, I have dialed up research effort and sub-planted more details in each post.
Have my posts become too wordy and saturated with details to the brim?
If so, do leave a comment and let me know. Thanks a bunch.
Without further delay, let’s continue to reveal remaining 4 US stocks that Berkshire Hathaway have sold based on its latest 13F filing with SEC.
Click here! to find out first 3 stocks sold by Berkshire Hathaway / Warren Buffett.
4. $Markel(MKL)$.
158,715 shares sold (entire position sold)
In Q4 2023, Berkshire has given this stock a heave-ho, to everyone’s surprise.
This is because the Markle Group - an insurance and investment company has been dubbed something of a "mini-Berkshire", given its penchant for making investments.
Buffett and his team dumped their entire position, which had been a continuous holding since Q1 2022.
Two educated guesses (on the full disposal):
Likeliest answer is valuation.
Since 2015, Markel Group had traded at or below 120% of its book value on only a handful of occasions. (see below)
MKL Price to Book Value Chart
One of those instances was during Q1 2022.
With Markel's premium-to-book value nearing 50% just prior to the start of October 2023, the lustre of getting a "deal" may have worn off.
The other possibility is Weschler or Combs (not Buffett), cut Markel loose.
Buffett's investment aides are considerably more active on the trading front than he is, and this position was ultimately held less than 2 years.
5. $StoneCo(STNE)$.
10,695,448 shares sold (entire position sold)
Brazil-focused fintech company, that had been in Berkshire's portfolio for 5 years, was also shown the door in Q4 2023.
Motivation for Berkshire to part ways with StoneCo probably had to do with the company's debt-driven challenges.
In 2022, Brazil's central bank has raised interest rates as high as 13.75% — to get the country's inflation rate under control.
Unfortunately, StoneCo's loan division was backed by debt, which sent its servicing costs soaring.
Even though management has addressed these issues, StoneCo is still something of a work in progress.
On the other hand, StoneCo has its fingers in far more than just payments in Brazil's economy.
It offers banking and credit solutions, as well as software, to micro, small, and medium-sized businesses.
Although add-on service adoption is climbing, StoneCo’s penetration occupies just a small fraction of the fintech market in Brazil.
6. $Globe Life Inc.(GL)$.
831,014 shares sold (entire position sold)
This was the 6th stock that Berkshire has kicked to the curb in Q4 2023.
Globe Life (a life & supplemental health insurance company) had been a continuous holding in Berkshire Hathaway's investment portfolio for > 20 years, prior to its sell off.
GL Price to Book Value Chart
Lack of valuation looks to be the most sensible reason behind Buffett & Co.'s decision to sell.
Shares of the company more than doubled following March 2020 Covid-19 crash, sending its price-to-book value to nearly 300% during Q4 2023. (see above)
At no point during the 22 years that Berkshire held shares, did it sustain a book value of > 200% for any length of time, let alone near 300%.
Berkshire Hathaway is known for concentrating its investments in their top ideas.
Globe Life never met the definition of a core holding, that ultimately sealed its fate.
7. $D.R. Horton(DHI)$.
5,969,714 shares sold (entire position sold)
Last but not least, homebuilder D.R. Horton was also booted from Berkshire's investment portfolio during Q4 2023.
This is one of the biggest head-scratchers of all, considering it was acquired only in Q2 2023.
Warren Buffett is a firm believer in holding wonderful businesses for extended periods, the purchase and subsequent “quick” disposal of Horton strongly suggests that Ted Weschler and/or Todd Combs were the masterminds behind this quick trade.
History may also have a role in the dumping of the shares.
Homebuilders are not known for delivering outsized investment returns.
Depending on Berkshire's entry and exit, it could have been up north of 50% on its stake in D.R. Horton in under 9 months.
That is actually an incredible gain for a traditionally slow-moving, highly cyclical industry.
With various money-based metrics and predictive indicators alluding to a possible recession in 2024, locking in gains may have been prudent.
My viewpoints: (mine & mine only)
I was ever so slightly “surprised” to find the remaining 4 of 7 stocks were completely disposed.
On hindsight, does it mean Berkshire was “wronged” to purchase the last 4 stocks?
Afterall, the internet has lots of posts explaining, when Mr Buffett purchase a company’s stocks — it is not a company’s stocks purchased per se.
Rather, Mr Buffett is buying to the business based on a company’s (a) Business model, (b) Financial health and (c) The CEO.
$Occidental(OXY)$ came to mind based off news articles on why Mr Buffett keeps shoring up stocks of this Energy company?
This despite Berkshire Hathaway having its own energy company - Berkshire Hathaway Energy?
He, even seek FERC’s blessing when its stake was about to exceed Occidental Petroleum’s 27% ownership.
Does the latest 13F filing hints at a changing “direction / style” in Berkshire Hathaway’s evolution to become more “results oriented” coupled with shorter tolerance for any of its purchase’s turnaround?
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