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Berkshire Once Again a Net Seller of Equities in Q3

The company bought back $7.6 billion worth of its own shares during the quarter.

Wide-moat-rated Berkshire Hathaway BRK.A BRK.B had already reported a fairly mundane quarter from a trading perspective for its equity investment portfolio when the firm released third-quarter earnings, noting that the company had sold some $3.4 billion worth of stock while also acquiring a little over $1.4 billion of equities during the September quarter. Contrast that with the fact that the company bought back $7.6 billion worth of its own shares during the quarter.

Following the release of the insurer's 13-F filing, we see that the stock sales involved a few eliminations and a mixture of position trimmings in its healthcare, financial services, and communication services holdings. Within healthcare, Berkshire reduced its stake in Abbvie another 30% (selling 6.1 million shares) and also trimmed its stake in Bristol-Myers Squibb by 16% (selling 4.2 million shares), raising some $950 million from the trades. On top of that, the insurer eliminated its stake in Merck, as well as its holdings of Organon, which was spun-off by Merck during the June quarter, raising some $750 million from the transactions.

Within financial services, Berkshire reduced its stake in Marsh & McLennan another 35% (selling 1.5 million shares), and also trimmed its stakes in Visa, MasterCard, and U.S. Bancorp, raising some $550 million in proceeds from the trades.

As for the communication services sector, the insurer eliminated its stake in Liberty Global, and reduced its stake in Charter Communications by nearly 20%, raising close to $800 million in the process.

As for the purchases, there were only three transactions during the quarter, with the insurer initiating new positions in Royalty Pharma and Floor & Décor--albeit smaller ones at around $500 million and $100 million, respectively, compared with $293.4 billion of total reportable holdings at the end of September. Berkshire also increased its stake in Chevron by 24%, making it a nearly $3 billion holding at the end of the third quarter.

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Greggory Warren

Strategist
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Greggory Warren, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the traditional U.S.-and Canadian-based asset managers, as well as Berkshire Hathaway.

Before assuming his current role in 2017, Warren covered the financial-services sector as a senior analyst since late 2008. Prior to that time, he covered non-alcoholic beverage manufacturers and distributors, packaged food firms, food service distributors, and tobacco companies. Before joining Morningstar in 2005, Warren worked as a buy-side equity analyst for more than seven years, covering consumer staples and consumer cyclicals.

Warren holds a bachelor's degree in accounting and English from Augustana College. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Chicago. During 2014-19, Warren was selected to participate on the analyst panel at Berkshire Hathaway’s annual meeting, asking questions directly of Warren Buffett and Charlie Munger. The analyst panel was disbanded ahead of Berkshire’s 2020 annual meeting. Warren also ranked second in the investment services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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