Sell No. 1: GlaxoSmithKline
The first and most obvious choice to go is GlaxoSmithKline (GSK), which represents just 0.02% of Berkshire Hathaway’s equity holdings, and whose position was reduced by 77% in the third quarter.
Berkshire’s top 10 holdings account for 83% of its $92 billion in equities. They’re what money managers commonly refer to as their “best ideas.” GSK is nowhere near the top 10 and represents one-seventh the weighting of French drug maker Sanofi (SNY), which Warren Buffett reduced in the third quarter.
After GSK hit an 11-year-plus high in late May, its stock has retreated after news that the company was involved in a bribery trial in China, not to mention it is facing significant competitive pressures regarding its respiratory drug Advair.
Bottom line: European drug stocks have gotten expensive, and GSK doesn’t warrant paying any sort of premium.