Stock Analyst Update

A Few Surprise Purchases for Berkshire

Greggory Warren, CFA

There were a few surprises in wide-moat  Berkshire Hathaway's (BRK.A) (BRK.B) third-quarter 13-F filing. 

While we expected to see buying activity, given the company's recent 10-Q highlighted $17.7 billion in purchases (offset by $5.2 billion of sales), our belief had been that much of that capital had been directed to narrow-moat  Apple (AAPL), with Berkshire having already acquired an additional 86.6 billion shares in the technology firm during the first half of the year and CEO Warren Buffett noting in late August that Berkshire had bought more Apple shares during the quarter. 

In reality, Apple ended up being one of the smallest purchases (523,000 shares for an estimated $107 million) for the insurer during the period, with Berkshire dedicating close to $14 billion to the purchase of stocks of financial services firms--namely narrow-moat  Bank of America (BAC) (198.2 million shares for an estimated $5.7 billion), narrow-moat  JPMorgan Chase (JPM) (35.7 million shares for around $3.9 billion), wide-moat US Bancorp (24.3 million shares for about $1.3 billion), narrow-moat  Goldman Sachs (GS) (5.1 million shares for an estimated $1.1 billion), no-moat  PNC Financial (PNC) (6.1 million shares for around $826 million), wide-moat  Bank of New York Mellon (BK) (13.0 million shares for about $685 million), and narrow-moat  Travelers Companies (TRV) (3.5 million shares for some $447 million). Of those names, JPMorgan Chase, PNC Financial and Travelers were new to Berkshire's equity portfolio. 

Other purchases included a new $2 billion stake in wide-moat  Oracle (ORCL), and smaller purchases of additional shares of  Delta Air Lines (DAL) and  General Motors (GM). These purchases were offset in part by the elimination of Berkshire's stakes in  Walmart (WMT) and  Sanofi (SNY), as well as sales of shares of  Phillips 66 (PSX) (which netted an estimated $2.2 billion),  Wells Fargo (WFC),  United Continental Holdings (UAL),  American Airlines Group (AAL),  Southwest Airlines (LUV) and  Charter Communications (CHTR) (some of which were ongoing adjustments to keep Berkshire's total ownership stake below 10%).

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Greggory Warren, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.