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A Confusing 13F Deadline Day for Berkshire Hathaway
Sorting through Berkshire's investment moves in a topsy-turvy first quarter
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As we all catch our breath after another frenetic 13F deadline day, I’d like to start with a brief word of thanks to the small (but amazing) band of Kingswell readers who have become paid subscribers over the past few months.
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Okay, now on to the main event…
Each quarter, all investment managers with more than $100 million of assets under their control must file a report (Form 13F) with the SEC to disclose any changes in their portfolios. And they must do so within 45 days of the end of the previous quarter — setting up yesterday’s mad dash as heel-draggers got their Q1 2023 papers in right under the wire. It’s a fun (and informative) way to see what some of our favorite super-investors have been buying and selling over the past few months.
But — and here comes my customary spiel — don’t turn 13Fs into anything more than an academic exercise. These are not cheat sheets of what your next move in the market should be. Nor are they endorsements about the future prospects of any company. No matter who’s doing the buying or selling.
Remember: Any moves revealed in these filings are only current as of March 31, 2023 — so they’re already six weeks old and quite possibly out of date. In other words, don’t coat-tail.
On the plus side, 13Fs perfectly illustrate how different investors — even those who espouse the same value-based principles — go about their business in drastically different ways. As Warren Buffett has been known to say, “In investing, there’s more than one way to get to heaven.”
And Berkshire Hathaway’s 13F should come with an additional word of warning:
Not all investments revealed herein were made by Warren Buffett.
With Todd Combs and Ted Weschler managing an ever-increasing portion of Berkshire’s portfolio, it can be difficult to discern which investments belong to Buffett and which come from his lieutenants.
Some try to read the tea leaves or make deductions based on a particular position’s size or industry, but — at the end of the day — everyone’s just guessing.
(So, whenever I write “Buffett bought…” or “Buffett sold…” a particular security, it might actually be Combs or Weschler’s handiwork. Such is the inherent uncertainty that all Berkshire students must labor under.)
Speaking of uncertainty, let’s take a look at what turned out to be one of the most confusing 13F deadline days — at least from a Berkshire Hathaway perspective — in recent memory…
Going in, the story seemed simple. For the second quarter in a row, Berkshire ended up as a net seller of stocks — with $13.3 billion of sales and only $2.9 billion of purchases. Warren Buffett obviously saw more value in Berkshire’s own stock — with $4.4 billion of repurchases during the first quarter — than he did in the wider market. We knew all of this from last week’s 10-Q, leading many to expect (as I did) that Berkshire would report relatively few investment moves.
So imagine everyone’s surprise when the following chart popped up on Dataroma after market close on Monday.
Something seemed off. It didn’t make much sense that Berkshire bought stock in ten different companies during Q1 2023 — especially considering it spent less than $3 billion on purchases throughout the entire quarter. (I wish I could take any credit for discovering the answer to this mystery, but many others on Twitter and elsewhere figured it out long before I did.)
What happened? For the first time ever, Berkshire included the holdings of Gen Re’s New England Asset Management in its 13F filing. So, in reality, we can cross out Apple, Bank of America, Citigroup, Diageo, HP, and Markel from the above list. Berkshire did not purchase any additional shares of those companies in Q1.
This should make everything much simpler in the future — combining New England Asset Management’s holdings with Berkshire’s own for filing purposes — but it confounded Dataroma (and me) yesterday.
And, to Berkshire’s credit, it tried to be as clear as possible about the switch. The company issued a press release on Monday afternoon alerting the public to the New England Asset Management situation — and even included a comment on the 13F’s cover page explaining which companies (and how many shares) would be affected by the new reporting process.
From the press release: “Since Berkshire Hathaway acquired General Re Corp. in December 1998, reportable 13F securities owned by Gen Re or its subsidiaries have been reported by New England Asset Management (NEAM), a wholly-owned subsidiary of Gen Re. Beginning with the Form 13F to be filed later today, the holdings of Gen Re will be included in Berkshire’s 13F filing.”
So, in actuality, Berkshire bought stock in just four companies during Q1 2023: Occidental Petroleum, Paramount Global, and newcomers Capital One Financial and Vitesse Energy. With the exception of 17.3 million shares of OXY 0.00%↑ — which we already knew about — these moves don’t much move the needle.
Confession time: I got the whole Paramount situation dead wrong. After all of Buffett’s tough talk about PARA 0.00%↑ and the streaming biz, I thought that this might presage a sale of some (or all) of Berkshire’s position in the embattled streamer. Not so. Berkshire bought more Paramount — 93,000+ shares of Class B stock — for the fifth straight quarter.
And for those surprised to see VTS 0.00%↑ — with its $550-ish million market cap — on Berkshire’s buy list, there’s a simple explanation for that. Jefferies Financial Group spun off Vitesse Energy in January, giving all shareholders of record one share of the new company for every 8.49668 shares of JEF 0.00%↑ they owned. As such, Berkshire (with its 433,558 shares of Jefferies) ended up with 51,026 shares of the oil-and-gas spinoff.
On the sales front, Berkshire reduced its stake in Chevron by approximately $6 billion. But adding and subtracting from CVX 0.00%↑ is nothing new. In fact, when it comes to Chevron, just call him Warren the Tinkerman. Since opening the position in Q3 2020, Buffett has never stopped making changes to it. This latest sell-off means that Berkshire has either bought or sold Chevron in eleven consecutive quarters. 👀
Buffett also sold 3.2 million shares of Activision Blizzard to reduce Berkshire's overall stake in the video game maker down to 6.2%. Despite trimming ATVI 0.00%↑ for the third quarter in a row, Berkshire still holds a sizable position as part of its merger arbitrage play on Microsoft’s potential $68.7 billion acquisition of the company. (Of course, that might have changed in the last six weeks, too…)
Berkshire fully exited four investments during Q1 2023. Three of the unlucky few — Bank of New York Mellon, U.S. Bancorp, and TSMC — come as no surprise after getting slashed in the latter part of 2022. RH also found itself on the chopping block.
Along with 20% cuts to McKesson Corp. and General Motors — and smaller snips to Amazon, Aon, Ally Financial, and Celanese.
Fingers crossed that next quarter’s 13F filing is a little easier to decipher.