Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Oct 17, at AM. Author Bio Keith began writing for the Fool in and focuses primarily on healthcare investing topics.
His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries. Follow keithspeights. Key Points Berkshire Hathaway bought only three stocks in the third quarter. Buffett is no doubt eyeing the stock market's valuation, which is at its highest level in over 20 years. Following Buffett's cautious approach could be a smart move for other investors, too. Image source: The Motley Fool.
Data source: Robert Shiller, Yale University. Chart by author. Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Join Stock Advisor Discounted offers are only available to new members. Stock Advisor launched in February of B Berkshire Hathaway Inc. To check this, an investor must determine a company's intrinsic value by analyzing a number of business fundamentals including earnings, revenues, and assets. And a company's intrinsic value is usually higher and more complicated than its liquidation value, which is what a company would be worth if it were broken up and sold today.
The liquidation value doesn't include intangibles such as the value of a brand name, which is not directly stated on the financial statements. Once Buffett determines the intrinsic value of the company as a whole, he compares it to its current market capitalization —the current total worth or price.
Well, Buffett's success, however, depends on his unmatched skill in accurately determining this intrinsic value. While we can outline some of his criteria, we have no way of knowing exactly how he gained such precise mastery of calculating value.
As you've probably noticed, Buffett's investing style is like the shopping style of a bargain hunter. It reflects a practical, down-to-earth attitude. Buffett maintains this attitude in other areas of his life: He doesn't live in a huge house, he doesn't collect cars, and he doesn't take a limousine to work. The value-investing style is not without its critics, but whether you support Buffett or not, the proof is in the pudding.
Berkshire Hathaway. Accessed Sept. Giving Pledge. Haven Health Care. CS Investing. Mary Buffett and David Clark. Scribner, Robert Hagstrom. Wiley, Securities and Exchange Commission. Warren Buffett. Business Leaders.
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Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. It's not nothing — CVX makes up 0. But Berkshire does drop from being the firm's fifth-biggest shareholder to No. Although energy prices aren't expected to make huge moves in the year ahead, the outlook for oil and gas is much improved and should only get better as the global economy recovers from the depths of the pandemic.
Regardless, Buffett and his lieutenants apparently felt compelled to get out of a sizable portion of the position while the gettin' was good. And given the latest action in the aforementioned SIRI sale and the reduction in Liberty Global Class A shares, it appears that Berkshire is unwinding a portion of its Malone-backed bets.
B portfolio to 0. Liberty Global bills itself as the world's largest international TV and broadband company, with operations in seven European countries.
Berkshire's investment in the Class A shares dates to the fourth quarter of It picked up the Class C shares, which have no voting power, in the first quarter of Berkshire now owns just 1.
Now, it's all but gone. Buffett slashed BRK. B's remaining stake almost to the bone in Q1, leaving nothing but a rump position in the nation's third largest bank by assets. The scandal-plagued mega-bank has been reeling for years in the wake of revelations that it opened millions of phony accounts, modified mortgages without authorization and charged customers for auto insurance they did not need. The business has been slow to recover, as has the stock. Buffett has sold off Wells Fargo shares in numerous quarters since the start of In Q2 , he jettisoned Buffett really brought out the wrecking ball in Q1, in the form of a B's remaining stake.
Berkshire Hathaway, once a top stockholder, now owns 0. This relationship is all but over. By the same token, it should be no surprise that SYF was ushered out as Buffett continues to hack away at his financial-sector holdings.
Synchrony, a major issuer of charge cards for retailers, was spun off of GE Capital in It's both a lender and a payments processor — like Buffett's beloved American Express — but it caters to customers who skew more toward the middle and lower end of the income scale.
The outperformance was even worse before Q1, with the market outpacing SYF The exit is no small loss for Synchrony; Buffett was the firm's seventh-largest shareholder as of the end of Q4 The ideal holding period for a Buffett stock might be forever, but the two stakes he exited in Q1 had been around for shorter than five years each.
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, Petro-Canada stations.
And for a few months, it was the lone position in the Berkshire Hathaway portfolio. Buffett quickly finished the job during the first quarter, ditching his remaining position of nearly 14 million shares.
It's hard to blame Buffett too much. Funnily enough, this was the second time Buffett quickly dabbled with Suncor. Berkshire Hathaway originally invested in the energy giant during , then sold the entirety of the position three years later.
Indeed, shares have more than quadrupled since this time last year, when many Americans started to realize that working from home was going to last more than just a few weeks, and thus began making plans to improve their new workplace environs.
Berkshire boasts Nebraska Furniture Mart among its subsidiaries, but added to its home furnishings exposure in Q3 when it brought RH into the fold. RH operates retail and outlet stores across the U. While brick-and-mortar retailers have struggled mightily over the past few years thanks in part to the rise of e-commerce, RH has found success catering to the upper crust.
That success has since been amplified by the COVID pandemic and a shift in where Americans have been putting their money to work. It's hard to tell whether this was an Oracle of Omaha buy, or a project of one of his lieutenants, Ted Weschler or Todd Combs.
Buffett has been mostly mum on RH. Still, the stake fits broadly with Buffett's worldview. Buffett stocks tend to be bets on America's growth, which is exactly what a bet on housing and housing-related industries is.
Regardless, Buffett and his lieutenants apparently feel that it's prudent to lighten up on the energy sector, which has cooled off recently amid COVID concerns. He first took a stake in the world's fourth-largest auto manufacturer by production in early And over the past few years, he became even more bullish, upping Berkshire Hathaway's holdings in , and as recently as Q3 That follows cuts of 5.
General Motors has always looked like a classic Buffett value bet. After all, there are fewer American brands more iconic than GM. And the stock perennially trades at crazy-cheap multiples of expected earnings. Then there's the matter of allocation. But most recently, Berkshire Hathaway has cut its position for a second quarter in a row.
That follows a reduction of 2. AbbVie now accounts for 0. The pharma giant is best known for blockbuster drugs such as Humira and Imbruvica, but analysts are also optimistic about the potential for its cancer-fighting and immunology drugs. Another thing that puts ABBV among classic Buffett stocks is the biopharma firm's storied dividend history. Even better, its current 4. Buffett shed 4. He followed that up by adding another 3. The investments followed BMY's late acquisition of pharmaceutical giant Celgene, which was thought to be a big part of Buffett's attraction to the stock.
The deal brought in a pair of blockbuster multiple myeloma treatments: Pomalyst and Revlimid, the latter of which also treats mantle cell lymphoma and myelodysplastic syndromes. That's kind of par for Bristol Myers' course. A long track record of successful acquisitions has kept the pharma company's pipeline primed with big-name drugs over the years. Among the better-known names today are Coumadin, a blood thinner, and Glucophage, for type 2 diabetes.
But if the past two quarters of selling are any indication, Buffett seems to have reset his expectations for BMY going forward. But up until recently, they've never been a major factor in its equity portfolio. The wind had changed direction over the past couple quarters. Berkshire initiated a 4. It wasn't a major position, at just 0.
Cut to today, however, and Berkshire spent Q2 unloading a fifth of the MMC position it spent the past two quarters building up. The pharmaceutical giant is a relatively new addition to the Berkshire Hathaway portfolio and a component of the Dow Jones Industrial Average. He bought another 6,, shares in the company in Q4. At that point, the pharma firm accounted for almost 0. B's equity holdings. And yet over the past two quarters, Buffett has dumped a total or more than 20 million shares.
In Q2 alone, BRK. B shed 9. That followed first-quarter sales of Buffett maintains long horizons, but it appears that he has quickly soured on the storied stock, even as analysts remain bullish, for the most part. Central to Merck's fundamental performance is Keytruda, a blockbuster cancer drug approved for more than 20 indications.
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