The status quo ruled at Warren Buffett’s Berkshire Hathaway investment department in the September quarter – with only a handful of changes, including two major moves – buying more Apple and selling more IBM.
Berkshire continued to abandon one of its longest held pillar stocks – IBM. In the latest investment managers report to US regulators Berkshire revealed it had sold another lot of IBM shares, but added to its newest ‘pillar’ in Apple.
Berkshire cut its IBM stake by 32% in the third quarter to about 37 million shares worth $US5.37 billion from 54.1 million shares worth $US8.32 billion at the end of June.
The IBM share stake has fallen by 54% since the end of 2016, when Berkshire owned roughly 81 million shares.
During the quarter, Berkshire also boosted its stake in Apple Inc by 3% to 134.1 million shares worth $US20.7 billion (now worth $US22.5 billion), and became Bank of America Corp’s largest shareholder by exercising warrants for 700 million shares.
The 700 million shares were worth $US17.7 billion at the end of September this year ($US18.4 billion this week).
In May, Buffett revealed he had begun selling IBM, telling CNBC he did not value the company as highly as he did six years earlier when he started buying.
“IBM is a big strong company, but they’ve got big strong competitors, too,” he said. One of which was Apple which his company had been buying for a year when he revealed the IBM sales.
For the third quarter, Berkshire also reported lower stakes in Wells Fargo & Co (as expected) and cable TV company Charter Communications Inc, and increased holdings in seed company Monsanto Co and credit card issuer Synchrony Financial which first appeared in the investment holdings in the June quarter (it was part of GE’s financial services group).
In April, it withdrew a Federal Reserve application for permission to exceed that level, citing restrictions on its ability to do business with the bank, and sold down several million shares.
It also no longer reported a stake in Wabco Holdings which sells brake and suspension systems for commercial vehicles.
The third quarter accounts for Berkshire (http://www.berkshirehathaway.com/qtrly/3rdqtr17.pdf) revealed that the value of that portfolio had jumped to more than $US157 billion from $US137 billion at June 30and $US122 billion at December 31, 2016.
The latest report reveals the significant shifts – at the end of September Berkshire said that
"Approximately 62% of the aggregate fair value was concentrated in the equity securities of five companies: American Express Company – $13.7 billion, Apple Inc. – $21.3 billion, Bank of America Corporation – $17.7 billion, The Coca-Cola Company – $18.0 billion and Wells Fargo & Company – $26.9 billion.
At the end of 2016 it was:
“Approximately 62% of the aggregate fair value was concentrated in the equity securities of five companies: American Express Company – $11.2 billion, Apple Inc. – $7.1 billion, The Coca-Cola Company – $16.6 billion, International Business Machines Corporation – $13.5 billion and Wells Fargo & Company – $27.6 billion."
