We know that after a disappointingly slow first half of 2020, where Warren Buffett’s Berkshire Hathaway was actually a net seller of stocks, Buffett finally started making some moves in the September-ended 3rd Quarter.
From Hathaway’s Sep-ended 3rd Quarter earnings report, we learned quite a bit about how the conglomerate is doing.
And although Berkshire isn’t required to disclose most of its stock investments until it files its latest 13-F, we do know about some of what Buffett and his stock pickers bought during the Quarter :
● The company still has over $140 billion in cash
● Warren Buffett and his team has been buying back stock aggressively
● Berkshire acquired the natural gas assets of Dominion for almost $10 billion including the assumption of debt
● In a series of purchases, Berkshire spent more than $2 billion increasing its Bank of America stake. Now Berkshire owns around 12% of the bank, which is now Berkshire’s second largest stock investment in its portfolio
● Berkshire invested about $720 million in Snowflake‘s highly anticipated IPO in September. The value of this investment has roughly doubled since
● Berkshire bought stakes in 5 – Japanese companies (Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo) with a total value of about $6.5 billion, it reported in August
Berkshire doesn’t discuss the contents of its stock portfolio in its quarterly reports, aside from reporting what its five largest holdings were at the end of the quarter.
However, Berkshire does report the cost basis of the stocks it owns, which essentially means the amount of money Berkshire paid for all of the stocks currently in the portfolio. And here’s how this has changed from the end of the 2nd Quarter to the end of the 3rd :
| Category | Cost Basis, June 30 | Cost Basis, Sep 30 |
|---|---|---|
| Banks, insurance, and finance | $31,164 | $27,145 |
| Consumer products | $38,706 | $37,016 |
| Commercial, industrial, other | $26,193 | $41,468 |
| Total cost basis | $96,063 | $105,629 |
Here are the key takeaways from this data :
● Berkshire’s overall cost basis increased by nearly $9.6 Billion in Sep-ended Quarter
● The cost basis for banks, insurance, and finance stocks decreased by about $4 billion. Buffett sold bank stocks in the 2nd Quarter, so it looks like he may have done the same in the third
● The cost basis for consumer products also decreased by about $1.7 Billion
● However, the cost basis for “commercial, industrial, or other” stocks increased by more than $15.3 billion during the Sep-ended 3rd Quarter. This is admittedly a broad category, but it looks like Buffett and his team invested heavily outside of its more “usual” sectors
It looks like Buffett saw some attractive opportunities in the stock market in the 3rd Quarter, and we are about to find out what they are.
