Warren Buffett's Berkshire Hathaway (BRK-A) Now Almost Out of Wells Fargo (WFC), Invests Further into Verizon (VZ) and Kroger (KR), More Selling than Buying Says Analyst

May 18, 2021 9:37 AM EDT
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Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) slashed its holdings in financial firms in the first quarter and cut its new investment in Chevron in half.

Warren Buffet’s conglomerate offloaded more of its Wells Fargo (NYSE: WFC) shares and reduced its investment in U.S. Bank's (NYSE: USB) owner as well as liquidated its entire stake of roughly $700 million in Synchrony Financial (NYSE: SYF).

By the end of the quarter, Berkshire only held 675,054 shares of Wells Fargo, after owning more than 10% of the financial services giant.

Berkshire announced it has bought $4.1 billion of Chevron’s (NYSE: CVX) stock three months ago but has slashed that figure to about $2.5 billion since then.

As for its new bets, Berkshire bought 4.1 million shares of the insurance broker Aon (NYSE: AON) and increased its stake in the professional services firm Marsh & McLennan (NYSE: MMC), where it now holds 5.3 million shares.

Furthermore, the conglomerate nearly doubled its stake in Kroger (NYSE: KR) to 51 million shares and added to its stake in Verizon (NYSE: VZ), increasing its stake to 159 million shares, up from 147 million three months ago.

On the other hand, Berkshire also reduced its stakes in a number of companies during the quarter including drugmakers Abbvie (NYSE: ABBV), Bristol-Myers Squibb (NYSE: BMY), and Merck, (NYSE: MRK) automaker General Motors (NYSE: GM), and Sirius XM (NASDAQ: SIRI)

The company did not touch its massive holdings in Apple (NASDAQ: AAPL) and Bank of America (NYSE: BAC) during the period.

Apart from its investments, Berkshire is an owner of over 90 companies including BNSF railroad, Geico insurance, and a number of major utilities, but it also owns companies from multiple other sectors including manufacturing, furniture, shoe, jewelry, chocolate, underwear, and more.

For Morgan Stanley’s analyst Michael Phillips, the latest trading activity shows Buffett is now more selling than buying.

“Berkshire's most notable increase in position was an additional +52% increase in KR (+17.5m shares). Additionally, Berkshire continued to purchase more shares of VZ (+12.1m shares) following its initiated position in 3Q20,” the analyst said in a memo to clients, before adding that “Berkshire did more selling than buying in the quarter, with a continued sell-off of large cap banks.”

“WFC, once a ~$30b position in 2017 has now been reduced to just $26m, after an additional 51.8m shares (- 99% of stake) sold in 1Q21. The company also liquidated its 20.1m shares of SYF in 1Q21.”

The analyst also notes that the value of the equity portfolio decreased to $257 billion as of the end of 1Q21 (excl.equity method investment in KHC) from $258 billion at 4Q20 (-1%).

Phillips has an “Equal-weight” rating on BRK.B with a price target of $277.00 per share, which is about 4% lower compared to the current market price.

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