Apple Gets Reprieve From Warren Buffett — And More From Berkshire Hathaway's 13F
A few holiday weekend thoughts on Berkshire's latest ins and outs...
It’s a Valentine’s Day tradition unlike any other: Feverishly refreshing the SEC website at 4 p.m. waiting for Berkshire Hathaway’s 13F to be released.
I always look forward to this quarterly peek behind the curtain at what Warren Buffett (and other notable super-investors) have been buying and selling.
What can I say?
I’m nosy.
But, like anything else, a super-investor’s 13F can be a double-edged sword.
One best used as a worthwhile academic exercise — a new group of names to research and learn more about — rather than a shopping list of stocks to rush out and buy. Nor is it an endorsement about the future prospects of any company.
Even if it is Warren Buffett doing the buying.
Here are a few short-and-sweet holiday weekend thoughts about the ins and outs of Berkshire Hathaway’s investment portfolio in Q4 2024…
(1) For the first time in a year, Warren Buffett did not sell any Apple stock
After reducing his AAPL 0.00%↑ position by more than 67% over the past four quarters, many wondered if Buffett would keep on selling — or even close out the investment altogether — especially after the tech giant shot up to new all-time highs around Christmas.
Nope.
Buffett decided to stand pat at 300 million shares.
A lot of speculation and spilled ink could have been saved if we had all just listened to what the man himself had to say at last year’s annual meeting. “At the end of the year,” he told the crowd, “I think it extremely likely that Apple is the largest common stock holding we have.” Buffett then went one better by calling the iPhone maker an “even better business” than permanent holdings American Express and Coca-Cola.
“Unless something really extraordinary happens,” he continued, “we will own Apple and American Express and Coca-Cola when Greg [Abel] takes over this place.”
As someone who never wanted Berkshire to sell a single share of Apple in the first place, I’m quite happy to see Buffett call time on these sales.
(2) He did, though, continue to sell Bank of America after it dropped under the 10% ownership threshold
But not nearly at the same breakneck pace that we saw over the summer.
In mid-July, Berkshire owned more than 1 billion BAC 0.00%↑ shares. By October 15 — when we stopped getting regular updates on further sales — that had dwindled to 766.3 million shares. Then, over the next two-and-a-half months, Buffett sold “only” another 86.1 million shares to put the holding at 680.2 million shares at quarter’s end.
I remember reading some guesses that he might stop selling around the 700 million mark because those shares were acquired via warrant at an extremely low-cost basis of ~$7 a piece. Those shares would, in turn, result in higher capital gains taxes.
Seeing as how the Bank of America position is still in that 700 million share ballpark, maybe that means we’re nearing (or at) the end of this sell-off, too. If nothing else, it opens up a little buffer so that any share repurchases on the bank’s behalf will not bump Berkshire back up over the 10% ownership mark any time soon.
(3) Ulta Beauty, we hardly knew ye…
Talk about a blink-and-you’d-miss-it investment. Someone at Berkshire opened a small Ulta position in the second quarter, sold 96.5% of it in the third quarter, and then exited altogether in the fourth. Oddly enough, this is almost exactly how the aborted TSMC investment played out in late 2022 and early 2023.
Let this be a lesson to anyone tempted to coat-tail Berkshire’s stock picks. Anything revealed in this 13F is only current as of December 31, 2024. In other words, all of this information is six weeks old and might already be out-of-date. Just because Berkshire was buying something a few months ago doesn’t mean that it’s not selling the same thing right now. Just ask Ulta and TSMC.
(4) The big news on the buy side is Constellation Brands
Berkshire purchased 3.1% of adult beverage powerhouse Constellation Brands in the fourth quarter. In retrospect, the timing was not ideal — as its stock price cratered in the new year after a second downward revision to its forecast in as many quarters.
(On the bright side, it creates an incredible buying opportunity if Berkshire’s conviction is strong enough…)
Depending on when exactly Berkshire bought these Constellation shares, it’s probably already underwater on STZ 0.00%↑ to the tune of $300+ million.
Roughly speaking, ~80% of the company’s earnings come from beer — particularly Modelo and Corona — with the rest from wine and spirits. And, while some worry that the rise of GLP-1 inhibitors (like Ozempic) might negatively affect future alcohol sales, Constellation CEO Bill Newlands doesn’t sound overly concerned.
“Alcohol’s percent of the consumer basket remains consistent,” he said last month. “The overall basket is down, but our percentage of that basket remains the same. I think that’s an important thing [to remember].”
(5) And some smaller moves to study…
We already knew about the Occidental Petroleum, Sirius XM, and Verisign purchases, but Berkshire also dipped back into Pool Corp. and nearly doubled up on Domino’s Pizza — and now owns 6.9% of the popular pizza maker.
But Q4 2024 was mostly about selling. In all, Berkshire either trimmed or exited eleven different investments in the fourth quarter.
Louisiana-Pacific got a small-ish cut for the third time in four quarters
T-Mobile and Liberty Media Formula One (Series C) tracking stock also received modest haircuts
Capital One Financial, Charter Communications, and Nu Holdings have all now been pared back for multiple quarters in a row
Citigroup got slashed by 73.5% — not an encouraging sign for its longevity as a member of the Berkshire portfolio
And, alongside Ulta Beauty, full exits for the SPY 0.00%↑ and VOO 0.00%↑ S&P 500 ETFs
Unfortunately, we don’t know for sure who made these particular moves. It does seem probable, though, that most of them came from Todd Combs and Ted Weschler.
We can speculate — based on the size of positions and their industry — but, at the end of the day, everybody’s just guessing. Such is the inherent uncertainty that all Berkshire students must labor under. (But that’s also part of the fun!)
$tsmc has more than doubled since Berkshire closed the position.