Buffett Sheds Apple, But Is Still A Raging Bull
Warren Buffett has been trending in the news again.
Berkshire Hathaway, the conglomerate headed by the oracle of Omaha, has just filed its most recent 13F with the SEC. As a refresher, this is the quarterly report that is required of all institutional investment managers with at least $100 million in assets under management.
Buffett and his fund-like company are closely followed by many investors, especially value-oriented ones. For this reason, it is usually a good idea to track what they have been buying and selling, as portfolio activity could be bullish or bearish developments for certain stocks.
Below are the couple of important takeaways from the regulatory filing, including my take on Berkshire’s change in Apple ownership.
Less bank, more healthcare
Before talking Apple, let me address the most attention-grabbing changes to Berkshire’s portfolio composition. In the third quarter, Buffett has shifted further away from financial services and closer to healthcare stocks.
Four healthcare names have been added to the portfolio. Combined, they now represent 2.4% of the total assets. The stocks are, in descending order of allocation size:
- Bristol-Myers Squibb
In order to free up space for the new holdings, Berkshire shed some shares primarily in financial services companies. JPMorgan was nearly erased from the portfolio, while the allocation to struggling Wells Fargo dropped in half.
Interestingly, and cutting against the grain, Buffett has not become any less optimistic about another financial services company: American Express. The portfolio allocation to this stock increased from 6.2% last quarter to 7.1% this time. Berkshire still owns nearly one-fifth of the credit card company.
Lastly, the widely discussed position in gold miner Barrick Gold from last quarter was cut by nearly half this time. It is interesting and perhaps surprising to see Berkshire partially unwind such a “historic” stake in such a short period of time.
Less of an Apple bull?
That leads us to Apple. The media highlighted the fact that Berkshire sold over $4 billion worth of shares in the third quarter, which could sound like a bearish move.
However, context is helpful. Below is Berkshire’s portfolio allocation to Apple and all other tech stocks.
- Apple still represents a whopping 46% of Berkshire’s assets, down less than two percentage points from the previous quarter.
- Apple seems to be the only tech name that Buffett trusts. Notice that all other tech stocks combined account for a stake that is less than one-tenth that of the Cupertino company.
In summary, yes: Berkshire owns less Apple that it did earlier this year. But the decrease has been minimal. Buffett and crew continue to be highly bullish, and I do not believe that Apple shareholders should worry much about losing the “Omaha seal of approval” for now.
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