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when Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) When CEO Warren Buffett buys or sells shares in a company, professional and casual investors pay close attention. That’s because the “Oracle of Omaha” has nearly doubled the total annual return of the benchmark index. Standard & Poor's 500 Since he took over as CEO in 1965. That nearly doubling in annual total return over nearly six decades works out to a total gain of 5,347,200% in Berkshire Class A shares, as of the closing bell on Aug. 15.
Although Buffett is prone to mistakes like any other investor, he Show a knack for finding amazing deals hiding in plain sight.Hence, capitalizing on its gains has been a fruitful investment strategy for decades.
But it is important to know when to sell, just as it is important to understand the stocks we are buying.
Last week, Form 13Fs These applications were filed by institutional investors with at least $100 million in assets under management. Form 13F provides a snapshot of what Wall Street’s most successful money managers were buying and selling.
Berkshire Hathaway Inc. reported record-breaking sales activity from the Omaha businessman and his top investment aides, Todd Combs and Ted Weschler. The trio has overseen seven straight quarters of net-worth sales, with more than $75 billion in net stock sales during the quarter ended in June.
Here is a list of the ten stocks that Warren Buffett sold during the second quarter.
1. Apple: Sold 389,368,450 shares (stake reduced by 49.33%)
What was striking about Berkshire Hathaway's 13F, which was technically revealed earlier this month when the company released its second-quarter operating results, was the nearly 50% drop in major shareholders. apple (NASDAQ:AAPL).
While Buffett has been a firm fan of Apple as a company and appreciates its historical capital return program, he expressed his view at his company’s annual shareholder meeting in May that corporate tax rates are likely to rise in the future. With Berkshire Hathaway sitting on a massive unrealized gain from its Apple stake, Buffett hinted that investors would appreciate in retrospect that his company would book those gains at a relatively lower tax rate.
Even after selling more than 389 million Apple shares, it still represents about 29% of Berkshire's invested assets.
2. Paramount Global: Sold its entire stake (7,531,765 shares)
Berkshire's complete exit from media stocks Paramount Global (NASDAQ: BARA) But that’s hardly a surprise. During the same annual shareholder meeting where Buffett predicted higher corporate tax rates, he noted that he (and he alone) had gotten rid of the remaining 7.5 million Paramount shares he held as of March 31—and at a huge loss!
Like most traditional media companies, Paramount has had to shift its focus to streaming options as cable churn accelerates. Unfortunately, building a streaming content library has proven to be a significant challenge and has weighed on the company’s operating results.
Paramount is one of those companies that lacks the expertise to deal with the Oracle of Omaha.
3. Snowflake: Sold outright (6,125,376 shares)
One of the biggest surprises of the 13F season was Berkshire's complete disposal of its stake in the cloud data storage company. snowflake (NYSE: SNOW).
Let’s be very clear: This was not a Buffett purchase. I can safely assume that Buffett does not understand anything about cloud storage. It was likely Todd Combs and/or Ted Weschler who made the decision to exit this stake, which was entered at Snowflake’s IPO price four years ago.
Although Snowflake has clear competitive advantages, its growth rate has slowed significantly since its IPO, and its valuation has remained high. With historically high stock prices, Snowflake is set to be beaten if its shares go public. Nasdaq Composite Rolling.
4. Chevron: Sold 4,369,673 shares (diluted by 3.55%)
For the second straight quarter, Buffett and his crew modestly reduced their company's stake in the oil and gas giant. Chevron (NYSE: CVX).
Since the beginning of this century, energy stocks have often played a minor role in Berkshire's investment portfolio. But as Buffett and his crew have steadily built Berkshire's stake in Occidental PetroleumBut under these circumstances, Buffett’s stake in Occidental, which was described as “indefinite” in Buffett’s most recent annual letter to shareholders, could see similar cuts to Chevron’s stake. In other words, Berkshire’s smartest investing minds probably don’t want any additional exposure to oil and gas as they increase their stake in Occidental.
However, since macro factors generally support a higher spot crude oil price, it would be surprising to see Buffett significantly reduce his company's stake in Chevron.
5. Capital One Financial: Sold 2,651,978 shares (stake reduced by 21.27%)
Perhaps the most puzzling of all the moves Berkshire Hathaway made on its 13F filing was the sale of 2.65 million shares of its credit services company. Capital One Financial (NYSE: COF).
Buffett is generally huge I’m a big fan of branded value stocks in the financial sector. Capital One shares are currently below book value and have a forward price-to-earnings ratio of 8.6. It’s a company that has benefited from the sharpest interest rate hike cycle in four decades.
The best guess I can offer as to why Buffett and Co. are cutting their stake in Capital One is consumer credit card delinquency trends. According to the Federal Reserve Bank of New York, 7.18% of credit card debt was seriously delinquent (90 days or more) in the second quarter, up from 5.08% in the year-ago quarter.
6. Floor & Décor: 802,130 shares sold (share reduced by 16.78%)
Approximately 802,100 shares were reduced in Flooring and Decor (NYSE: FND) It has a similar feel to Snowflake in that it's likely the work of Combs and Weschler more than Buffett.
Floor & Décor was a company that initially benefited from the rapid rise in interest rates. As mortgage rates rose, it paved the way for the company to reap rewards from people who chose to stay in their existing homes and remodel them.
Unfortunately, the luster of the high-interest-rate environment has faded. CEO Tom Taylor has warned that higher interest rates are hurting discretionary spending on hardwood flooring, which has all but halted Floor & Décor’s revenue growth. While management has tools it can use to boost its margins, the forward P/E ratio of 51 is too good to ignore.
7. Louisiana-Pacific: 633,154 shares sold (stake reduced by 9.6%)
With the exception of Apple, Paramount, and Chevron, where Berkshire's operating results and/or Buffett's comments revealed selling activity, I would argue that the easiest predictable cut was the biased financing solutions provider. Louisiana-Pacific (NYSE: LPX).
Last week, I assumed that Buffett and his investment aides would exit the stake entirely given expectations of a rate-easing cycle by the Federal Reserve beginning in September.
When mortgage rates rose, it effectively froze the existing home sales market and opened the door for suppliers to homebuilders like Louisiana Pacific to flourish. As mortgage rates fall, the luster of homebuilders and their suppliers is likely to fade.
8. T-Mobile: Sold 570,000 shares (stake reduced by 10.87%)
The eighth stock that Warren Buffett sold in the quarter ending in June is the telecom giant. T-Mobile (NASDAQ: TMUS).
The Oracle of Omaha has a bit of a checkered history with telecoms, and it doesn’t tend to stick with them for long periods. T-Mobile’s once-hot sales growth rate has certainly slowed in recent years, while its long-term debt has risen modestly since the pandemic.
However, despite slowing revenue growth, T-Mobile's earnings per share and adjusted free cash flow (FCF) are expanding. To a large extent The $4.4 billion in free capital inflows in the second quarter are faster than any other free capital outflow ever, and may be enough to entice Buffett, Combs and Weschler to stay.
9. & 10. Liberty Live Group: Sold 214,929 Class C Shares (LLYV.K) (stake reduced by 1.93%) and sold 65,330 Class A Shares (LLYV.A) (stake reduced by 1.29%)
Last but not least, Warren Buffett and his investment team were sellers. Liberty Life Group (NASDAQ: LLYV.K)(NASDAQ: LLYV.A) During the second quarter. The declines in Series A and C shares were minimal (less than 2%), and Todd Combs or Ted Weschler were likely behind the sale.
Liberty Live Group is owned by Liberty Media and is actually a tracking stock for Liberty Media's large stake in Live Nation Entertainmentthe parent company of Ticketmaster. Since Berkshire acquired its stake in Liberty Live Group through a subsidiary, and neither Buffett, Combs, or Weschler initially purchased shares of this tracker stock, the accidental sale and/or profit-taking is not too surprising.
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Sean Williams The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Chevron, and Snowflake. The Motley Fool recommends Live Nation Entertainment, Occidental Petroleum, and T-Mobile US and recommends the following options: Sell $90 October 2024 short put contracts on Live Nation Entertainment. The Motley Fool has Disclosure Policy.
Here Are All 10 Stocks Warren Buffett Is Selling Originally posted by The Motley Fool
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