Berkshire Hathaway: Detangling New England Asset Management From Gen Re’s Holdings Alters Our View of Portfolio Changes

Having had a chance to sift through the changes in wide-moat Berkshire Hathaway’s BRK.A BRK.B first-quarter 13F filing now that the company has segregated its holdings at New England Asset Management (a wholly owned subsidiary of the firm’s General Re insurance subsidiary) from those that will continue to be managed as separate client holdings (amounting to $645 million at the end of March 2023), we are updating our comments about the company’s equity investment portfolio for the most recent quarter.

The NEAM portfolio consists of separately-managed assets for non-Berkshire clients. We’ve questioned the insurer on a few occasions about how much of the holdings at NEAM (which amounted to $5.4 billion in that firm’s 13F at the end of 2022) were Berkshire’s and how much was being managed for non-Berkshire subsidiaries or clients, and we were pleased to see that issue finally clear up.

Berkshire noted that its 13F filing now includes holdings owned by General Re but formerly reported by NEAM: Apple AAPL (20.4 million shares), Bank of America BAC (22.8 million shares), Chevron CVX (2.1 million shares), Citigroup C (89,000 shares), Diageo DGEAF (227,750 shares), HP HPQ (16.5 million shares), and Markel MKL (4,050 shares).

That said, we suspect that larger holdings in Bank of New York Mellon BK and US Bancorp USB (both of which were eliminated from Berkshire’s portfolio before the end of the first quarter) reported by NEAM in past periods should also be ascribed to the insurer.

With that in mind, we would note that Berkshire still reported a relatively busy quarter for its insurance company equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $10.4 billion (comprising sales of $13.3 billion and stock purchases of $2.9 billion) based on the company’s 10-Q filing for the March quarter. This was $3.5 billion more in net sales than was reported in the company’s 13F filing, with Berkshire’s sale of additional shares in Chinese electric car maker BYD BYDDY during the quarter likely accounting for most of the difference.