It’s been said that investors should not try and mirror the moves by Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK-A, BRK-B). That’s partially true. Because BRK stock holdings are not revealed for a full quarter after they occur, it means investors may be as much as six months behind whatever moves BRK stock makes.
Still, better late than never has generally paid off with following Buffett’s strategy. I prefer to examine the holistic messaging investors are given about specific stocks when we learn what BRK stock has done with its portfolio each quarter. Here’s what I think Buffett thinks about various stocks that he’s made moves on this past year.
Apple, Inc. (NASDAQ:AAPL) finally made it into the BRK stock portfolio, just two years ago, but at pretty great prices. Berkshire has added to this position repeatedly, and this suggests that as averse to tech as Buffett has always been, he sees the value in Apple both from a consumer and B2B perspective.
This tells me that he sees Apple as a stock for the long term, with a solid brand, and believes enough in Tim Cook to put his money to work with the man.
Bank of America Corporation (NYSE:BAC) is in the Berkshire stock portfolio by dint of the warrants Berkshire was granted during the bank’s crisis in 2008-9. Berkshire exercised those $7.14 warrants, and owned 679 million shares (6.5% of the company) as of its last filing. That means only 21 million shares were disposed of.
This seems to be a vote of confidence in the ongoing rebuilding of the bank. I suspect Berkshire Hathaway stock will continue to hold BAC at this level of ownership, but we’ll see if the holdings drop each quarter or not.
Synchrony Financial (NYSE:SYF) was a well-timed purchase in mid-2017 that is up almost 35% since Buffett purchased it. Synchrony has had terrific revenue increases and is enjoying excellent results from its broad range of credit products. SYF doesn’t only deal in credit cars, but in offering promotional financing for all kinds of products.
Buffett has been increasing this stake and I expect this to continue. SYF is itself worth looking at for your portfolio.
International Business Machines (NYSE:IBM) was, to me, an odd purchase for BRK stock back in 2011. Even odder was continued accumulation all the way through 2016.
IBM is a moribund company lacking strategic vision. Yes, it is trying a few new things but it feels like a relic of the 20th century.
Buffett lopped off almost two-thirds of his IBM position in 2017, and this seems like a clear message that IBM is to be avoided considering BRK stock has a cost basis of about $168 in IBM and was selling it for small losses and small gains.
Charter Communications, Inc. (NASDAQ:CHTR) was added in mid-2014 to the Berkshire Hathaway stock portfolio, and positions were added all the way through 2015. Buffett has sold about 20% of the position since mid-2016, at a sizable profit. I suspect this has more to do with rebalancing the portfolio more than anything else.
All the other positions have been relatively steady for some time. I think the moves above are worth considering mirroring in your own portfolio, depending of course, on your own risk profile and long-term strategy.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.
