Berkshire's Net Purchase of Equities in Q3; Apple Tops

Unlike most periods, there were a few surprises in wide-moat Berkshire Hathaway's BRK.A BRK.B third-quarter 13-F filing, with the firm actually taking positions in four different healthcare firms--AbbVie, Merck, Bristol-Myers Squibb, and Pfizer--while making meaningful reductions in several of its bank holdings--JPMorgan Chase, PNC Financial Services, Wells Fargo, and M&T Bank. We had some sense about the Wells Fargo trades, noting that Berkshire (through information provided in its Form 4 and Schedule 13G filings intra-quarter) seemed to be swapping out of Wells Fargo in favor of Bank of America (where the insurer now holds more than 1 billion shares following the purchase of an additional 85 million shares during the third quarter).

While Bank of America accounted for 10.6% of Berkshire's $228.9 billion 13-F portfolio at the end of September 2020, Apple (despite the sale of some 36 million share post the company's 4-for-1 split) remained its largest holding, accounting for 47.8% of the portfolio's holdings (up from 44.1% at the end of June 2020). Other sales during the September quarter included a 40% reduction in the insurer's stake in Barrick Gold, and mid-single-digit declines in holdings in Liberty Global, DaVita, and Axalta.

Proceeds from these sales helped fund the new-money purchases of the aforementioned healthcare names, as well as a new-money purchase of T-Mobile US and participation in the Snowflake initial public offering. Other positions that Berkshire added to during the quarter included Kroger, Liberty Latin America, and General Motors. As holdings in foreign investments that are held abroad, such as Berkshire's $5 billion stake in BYD Corporation, are not disclosed in the company's 13-F filing, it did not pick up the 5% stakes that the insurer took in each of five leading Japanese trading companies--Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo--which were worth around $6 billion on a combined basis at the end of last month.

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