Berkshire Hathaway 13F Filing: More Sells Than Buys in Quieter Q4

Key Morningstar Metrics for Berkshire Hathaway (BRK.A)

• Fair Value Estimate: $600,000.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Low

What We Thought of Berkshire Hathaway’s Filing

Wide-moat-rated Berkshire Hathaway BRK.A reported a quieter fourth quarter for its equity investment portfolio, with net sales, exclusive of purchases, coming in at an estimated $1.8 billion based on the insurer’s recent 13F filing.

The biggest reduction from the portfolio on an absolute basis was a significant sale of HP shares, with Berkshire selling 79.7 million shares, or 78% of holdings, at the end of September 2023 for an estimated $2.2 billion. The company also sold off about a third of its stake in Paramount Global, selling 30.4 million shares for $420 million. It made a minor adjustment to its Apple position, selling 10.0 million shares, or 1% of holdings at the end of the third quarter, for $1.8 billion. Berkshire also eliminated stakes in D.R. Horton (raising an estimated $775 million), Markel ($230 million), StoneCo ($150 million), and Globe Life ($95 million).

As for purchases, the insurer only reported additions to existing holdings, picking up another 15.8 million shares of Chevron for an estimated $2.5 billion, 19.6 million more shares of Occidental Petroleum for $1.1 billion, and an additional 30.6 million shares of Sirius XM Holdings for $150 million. We also know that Berkshire has been busy since the start of 2024, acquiring 4.3 million more shares of Occidental for $245 million, as well as 3.5 million Class A shares and 5.3 million shares Class C shares of Liberty Media SiriusXM for $107 million and $160 million, respectively.

What was not disclosed was what securities Berkshire has been buying behind the veil of confidentiality offered up by the SEC, which occasionally permits confidential treatment of new stock purchases by large portfolio managers when “such action is necessary or appropriate in the public interest and for the protection of investors or to maintain fair and orderly markets.” Berkshire received exemption the past two quarters, leaving its biggest stock purchases during the back half of 2023 a mystery.

Berkshire Hathaway’s Biggest Purchases a Mystery

From what we could tell from the firm’s third-quarter 10-Q filing, the company acquired $1.7 billion in equities that were not showing up in the 13F filing in November of last year. Some of that total might be tied to additional purchases that Berkshire has made in the five Japanese trading houses Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. The insurer was expected to acquire up to 10% of each firm before the end of 2023. That said, the firm wouldn’t file for a 13F reporting exemption for these securities as foreign holdings are not required to be disclosed by the SEC.

While there has been some speculation out there that more than half of the total was invested in shares of financial services firms, given that the insurer’s cost basis for its holdings in banks, insurance, and finance firms rose to $24.7 billion at the end of the third quarter from $23.5 billion at the end of the second quarter, with no additions to its existing holdings, based on information provided in the company’s November 2023 13F filing, eventually, Berkshire will disclose the stock or stocks that they have been buying.

On a separate note, the insurer ended December 2023 with $347.4 billion of reportable equity holdings based on its fourth-quarter 13F filing, up 10.9% from reportable equity holdings at the end of September 2023 and 14.4% from the end of December 2022. This needs to be put in some perspective, though, as Berkshire has been a net seller of stocks for much of the past year.

As for portfolio dynamics, the top five stock positions in the 13F portfolio at the end of the fourth quarter—Apple (50.2%), Bank of America (10.0%), American Express (8.2%), Coca-Cola (6.8%), and Chevron (5.4%)—accounted for 80.6% of the insurer’s stock holdings, up from 79.4% at the end of the third quarter. Berkshire’s top 10 holdings, which included Occidental Petroleum (4.2%), Kraft-Heinz (3.5%), Moody’s (2.8%), DaVita (1.1%), and Citigroup (0.8%), accounted for 91.9% of the insurer’s stock holdings at the end of December, up from 91.9% at the end of the September quarter.

The company’s equity investment portfolio remains fairly concentrated in its largest holdings, with its top 25 positions accounting for 99.1% of the portfolio, which had a total of 37 different holdings, with Class A and Class B shares counted as one combined holding, at the end of December 2023.

From a sector-allocation perspective, given the dramatic market movements and all of the transaction activity made by Berkshire over the last year, the financial-services sector accounted for 21.5% of the portfolio at the end of the fourth quarter, down from 22.3% at the end of 2022, and technology stocks at 51.5% were up from 41.6% at the end of 2022. These two largest sector bets for the insurer accounted for 73.0% of the reported portfolio.

Further down the list at the end of the fourth quarter were consumer defensive names at 10.9%, down from 13.5% at the end of the fourth quarter of 2022, and energy holdings at 9.6%, down from 13.9% at the end of 2022. The rest of the $347.4 billion 13F equity portfolio was made up of holdings from the industrials (2.9%), consumer cyclical (1.3%), communication services (1.2%), and healthcare (1.1%) sectors as defined by Morningstar.