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All Contents © 2019The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| August 15, 2018
Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B, $205.83), wasn’t kidding when he said he couldn’t get enough bites of Apple’s (AAPL) stock.
The Oracle of Omaha added to Berkshire Hathaway’s already hefty stake in the iPhone maker during the three months ended June 30. Apple has since gone on to become the first U.S. company to top $1 trillion in market value.
Buffett has made his ardor for Apple well-known, but the world’s greatest value investor made a number of other noteworthy moves in the second quarter, according to a new 13F regulatory filing. (Large investors such as Berkshire are required to disclose their holdings to the Securities and Exchange Commission every three months.)
The big picture remains the same. Buffett is, as always, bullish.
In total, Berkshire spent $6.1 billion on stocks in the second quarter. And since it can be instructive to see what Buffett has been up to, we took a closer look at what Berkshire has been buying and selling. Keep in mind that bigger investments are thought to be made by Warren Buffett himself, while smaller positions are believed to be handled by lieutenants Ted Weschler and Todd Combs.
With that caveat in mind, here are the most notable recent changes to Berkshire Hathaway’s stock holdings.
Data is as of Aug. 14, 2018. Sources: Berkshire Hathaway’s SEC Form 13F filed Aug. 14, 2018, for the reporting period ended June 30, 2018; Fintel Financial Intelligence; S&P Global Market Intelligence; CNBC\'s Berkshire Hathaway Portfolio Tracker.
Action: Added to stake
Shares held: 252 million (+5% from Q1)
Value: $52.8 billion
Berkshire Hathaway raised its stake in Apple (AAPL, $209.75) by more than 5% in the second quarter, purchasing more than 12 million additional shares.
Under Buffett’s watch, Berkshire has amassed 5.2% of Apple’s shares outstanding, making it the technology giant’s third-largest stockholder after Vanguard Group and BlackRock (BLK), according to data from S&P Global Market Intelligence.
And don’t expect Uncle Warren to stop there. “I’d love to own 100% of it,” he told CNBC on May 7. Buffett sees value in Apple even after topping a trillion dollars in market capitalization. “We like very much the economics of their activities. We like very much the management and the way they think.”
Shares held: 13.3 million (+21% from Q1)
Value: $3 billion
Warren Buffett bought another 2.3 million shares in Goldman Sachs (GS, $229.56), raising Berkshire Hathaway’s stake in the Wall Street investment bank by 21%.
Berkshire first picked up its stake in Goldman Sachs during the 2008 financial crisis. Buffett paid $5 billion for preferred shares and warrants to purchase common stock. The preferred shares came with a dividend yield of 10%. Goldman redeemed its preferred shares in 2011. Berkshire bought another $2 billion in Goldman stock when it exercised the warrants in 2013.
Buffett has parlayed the original investment into a 3.5% stake in Goldman Sachs worth $3 billion. And Berkshire is now the bank’s fourth-largest shareholder.
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Shares held: 43.2 million (+6.7% from Q1)
Value: $956.7 million
Berkshire Hathaway continues to be bullish on Teva Pharmaceutical (TEVA, $22.12). The company upped its holdings in the Israeli drug manufacturer by 6.7%, or 2.7 million shares, in the most recent quarter.
Remember: Berkshire Hathaway more than doubled its stake in Teva in the first three months of 2018. The additional investment has Berkshire’s stake in Teva worth close to a billion dollars.
Teva’s stock trades at just 8 times estimated earnings, which Buffett apparently regards as a bargain. Berkshire Hathaway now owns 4.3% of Teva’s shares outstanding, making it the drugmaker’s third-largest stockholder.
Shares held: 63.7 million (+18.8% from Q1)
Value: $3.5 billion
Warren Buffett continues to be bullish on at least some players in the airline industry. (More to come on this later.) Berkshire bought another 10.1 million shares in Delta Air Lines (DAL, $30.43), upping its stake by 18.8%.
Berkshire’s holdings in the carrier are worth $3.5 billion. Buffett began investing in Delta and several other airlines in 2016 after decades of shunning the industry.
It has been quite a reversal. Berkshire Hathaway is now Delta Air Lines' top shareholder. It owns 63.7 million shares, or 9.2%, of DAL’s shares outstanding.
Shares held: 56.5 million (+18.7% from Q1)
Value: $3.3 billion
Buffett’s attitude toward airline stocks may have made a stunning reversal over the past few years, but he’s still picky. Of his four original big bets in the business, only Delta and Southwest Airlines (LUV, $59.09) received continued votes of confidence in the second quarter.
Buffett raised Berkshire’s stake in Southwest by 18.7%, according to regulatory filings. Berkshire is now the carrier’s second-largest shareholder with 56.5 million, or 9.9%, of all shares outstanding.
As we’ll see later, Berkshire’s other airline industry stocks — American Airlines (AAL) and United Continental Holdings (UAL) — didn’t get much love in the second quarter.
Shares held: 100.7 million (+11% from Q1)
Value: $5.4 billion
Warren Buffett bought another 9.8 million shares in U.S. Bancorp (USB, $53.17) in the second quarter. Berkshire Hathaway is the regional bank’s third-largest shareholder with 6.2% of all shares outstanding. Its 100.7 million shares, an increase of 11% from the previous quarter, is worth $5.4 billion.
Buffett is notoriously tight-lipped about U.S. Bancorp, Barron’s notes, but the lender has consistently generated the highest returns among the top 10 banks, which helps explain its appeal.
Gerard Cassidy, an analyst with RBC Capital Markets, tells Barron’s that U.S. Bancorp deserves a place as an anchor in a portfolio of bank stocks.
American Airlines (AAL, $37.09): Pared stake by 2.8% to 44.7 million shares worth $1.7 billion.
United Continental (UAL, $81.44): Pared stake by 3.7% to 26.7 million shares worth $2.2 billion.
Phillips 66 (PSX, $120.94): Pared stake by 24% to 34.7 million shares worth $4.2 billion.
Wells Fargo (WFC, $58.07): Pared stake by 1% to 452 million shares worth $26.2 billion.
Charter Communications (CHTR, $34.47): Pared stake by 8.7% to 7.5 million shares worth $2.3 billion.