Berkshire Hathaway‘s record quarterly share purchases of $ 51.1 billion in the first quarter, including major purchases of
Occidental Petroleum, was probably the biggest news in the company’s earnings report and 10-Q, released on Saturday.
The company’s $ 9.7 billion share sale in the period revealed in 10-Q understandably generated less attention. Berkshire Hathaway (ticker: BRK.A, BRK.B) has not disclosed the shares it sold, and CEO Warren Buffett did not discuss the topic at the company’s shareholders’ meeting on Saturday in Omaha.
There are indications of that
Verizon Communication (VZ) was the focus of the sale.
Berkshire also appears to have bought around $ 10 billion in financial shares in the quarter, based on information in the company’s 10-Q. It would reverse Buffett’s large sales of finances as
JP Morgan Chase (JPM),
Goldman Sachs Group (GS), and
Wells Fargo (WFC) in 2020 and 2021. Berkshire’s entire equity portfolio, led by
apple (AAPL), a total of $ 390 billion.
There will be more clarity in mid-May about what Berkshire bought and sold in the first quarter when it reports its quarterly stock holdings as of March 31 on a Form 13-F with the SEC.
Barrons analysis of Berkshires 10-Q suggests that the company may have sold all or most of its stake in Verizon in the first quarter.
Here’s the reason: Berkshire said it incurred $ 739 million in realized losses on stock sales in the first quarter. Berkshire had a nearly 159 million stake in Verizon at the end of 2021, worth $ 8.3 billion. The effort had a cost basis of $ 9.4 billion, or around $ 59 per share.
Verizon traded in the first quarter mostly in a range of $ 53 to $ 54 per share. This means that if Berkshire sold the entire Verizon stake, it would have realized an estimated loss of around $ 800 million. A full sale of $ 54 per share would give Berkshire around $ 8.6 billion.
Verizon in particular was the only one of the 15 largest Berkshire holdings at the end of 2021 listed in Buffett’s annual letter where the company had a loss in relation to costs. Most of the Verizon share was acquired in 2020.
Here is the language from 10-Q: “Taxable investment gains / losses on shares sold in the first quarter, which is generally the difference between the sale proceeds and the original cost basis for the securities sold, were losses of $ 739 million in 2022 and gains of 1.8 billion in 2021. »
If Buffett sold Verizon, it looks like a good move, since the stock is now trading at $ 46. Berkshire had no immediate comment.
Berkshires 10-Q shows that the company’s cost base in financial stocks was up $ 9.6 billion in the first quarter. This probably means that Berkshire bought around $ 9.6 billion in finance.
Buffett’s major acquisition in the first quarter was the Chevron (CVX). Berkshire bought about 121 million shares to raise its stake to about 159 million shares, worth $ 25.9 billion. It is not clear what Berkshire paid for the additional Chevron shares given that the stock rose to $ 162 per share from $ 117 during the period. At the average price during the period, Berkshire would have paid around $ 17 billion.
Berkshire bought about $ 7 billion in Occidental Petroleum (OXY) in the quarter, $ 4 billion in HP (HPQ) and about $ 600 million from Apple.
Buffett said at the meeting on Saturday that Berkshire owns around 9.5% of
Activision Blizzard (ATVI) – about 74 million shares – now worth around $ 5.6 billion. It is not clear how much of Berkshire’s acquisition was made in the first quarter. Berkshire had owned around 15 million shares at the turn of the year.
Based on Buffett’s comments at the meeting, the Activision acquisitions may have taken place mainly in April. He said he did not see Activision’s share price of around $ 82 after
Microsoft announced its $ 68.7 billion video game maker acquisition in January as a particularly attractive arbitration situation.
Microsoft pays $ 95 per share. Activision traded around $ 80 through April and ended Friday at $ 75.60. It’s up 3% on Monday on the news of the Berkshire acquisition, but is still trading at a discount of around 19% on the deal price, reflecting antitrust concerns.
Buffett also said at the meeting that Berkshire had bought shares in three German companies in the first quarter, but did not reveal the names.
Write to Andrew Bary at email@example.com