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Berkshire Hathaway shrinks investment portfolio to decade low

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2024-02-15

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Warren Buffett's Berkshire Hathaway has trimmed its renowned investment portfolio to its lowest level in nearly a decade, with only 41 companies remaining after divesting four holdings entirely in the last three months of December. Despite this reduction, the company anticipates substantial unrealized capital gains in its upcoming 2023 results.

In this period, Berkshire Hathaway continued to amass oil stocks and selected media companies in radio and cable TV, while adjusting its holdings in Paramount Global and Apple. This move possibly aimed to accumulate over $1.8 billion in cash, hinting at a potential major deal on the horizon.

In its quarterly report listing US-listed stock holdings, Berkshire Hathaway revealed the sale of shares in Globe Life, Markel, DR Horton, and StoneCo, marking a shift from its positions three months earlier. Additionally, the company obtained permission from the US Securities and Exchange Commission to temporarily keep some holdings confidential, stirring curiosity among analysts.

Despite a potential undisclosed addition to its portfolio, Berkshire Hathaway's recent sales reduced the number of stocks to 41 from 45 in the previous quarter and down from 49 at the close of 2022, marking the lowest count in over nine years.

Aside from the four total sales, Berkshire Hathaway significantly reduced its holdings in Paramount, which has faced challenges, including layoffs across the US, UK, and Australia. Meanwhile, its stake in HP Inc. saw a substantial decrease, now valued at just over $687 million from its original $3.5 billion in early 2022.

Despite these sales, the value of Berkshire Hathaway's portfolio surged more than 10% to $347.86 billion by December 2023, from $313.26 billion in September and $299 billion at the end of 2022. This increase implies unrealized capital gains exceeding $34 billion for the December quarter and over $47 billion for the entire 2023 fiscal year.

Analysts speculate that Berkshire Hathaway's divestment in Apple, amounting to over $1.8 billion, may signal a major new investment. However, Apple's value, although substantial, remains just over half the total portfolio value.

While Berkshire Hathaway's portfolio gains momentum with increased holdings in Chevron, Occidental Petroleum, SiriusXM, and Liberty Media, the performance may face scrutiny, particularly with Apple's recent decline amidst a rising S&P 500 index.

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