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Berkshire Hathaway Lifts Lid on Latest Investing Activity
Plus, Charlie Munger takes a well-deserved victory lap after the FTX crypto collapse
Happy Wednesday and welcome to our new subscribers!
I hope everyone survived the frenzy of 13F deadline day.
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 Monday’s mad rush as heel-draggers got their 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.
Just don’t turn 13Fs into 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.
Remember: Anything revealed in these filings is only current as of September 30, so it’s already six weeks old and quite possibly out of date.
In other words, don’t coat-tail.
But, 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.
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As I’ve said before:
Berkshire Hathaway’s 13F should come with a warning.
Not all investments revealed herein were made by Warren Buffett.
With Ted Weschler and Todd Combs 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 Weschler or Combs’s handiwork. Such is the inherent uncertainty that all Berkshire students must labor under.)
We knew, going in, that Berkshire had bought $9 billion worth of stocks and sold about $5.3 billion during the third quarter.
I’ve been tempted to say that Warren Buffett and co. proved to be surprisingly restrained buyers — like in Q2 — but that may be unduly colored by Berkshire’s monster first quarter with $51 billion of stock purchases.
$9 billion pales in comparison to that eye-popping number, but still represents a pretty significant outlay of capital.
In all, Berkshire has spent nearly $67 billion on securities through the first three quarters of 2022. And that’s nothing to sneeze at.
Let’s dig in on some of the highlights…
(1) TSMC has entered the chat
Last week, I predicted that this 13F release might be something of a damp squib.
Instead, Berkshire Hathaway unveiled a new $4 billion position in Taiwan Semiconductor Manufacturing Co., which manufactures semiconductors on a contract basis for major companies around the world. (Including Apple.)
Buffett purchased 60.1 million shares of the chipmaker as prices dipped in the third quarter on global demand worries. And, considering the price of TSM 0.00%↑ fell even further in October, he may have bought the dip and added more. We'll find out in February.
In any event, TSMC immediately vaults into the top ten largest holdings in the Berkshire portfolio.
I’ve seen some commentary about how this move represents another foray into tech stocks for the famously tech-averse Buffett. But I bet he sees TSMC more in the vein of Apple. Not as a consumer brand, but as a company with an infrastructure and moat that makes it almost impossible for competitors to wrest away market share.
A company that almost transcends the tech descriptor.
Easily the biggest buy of the quarter and one to keep an eye on in the months ahead.
(2) Buffett bets big on oil
Berkshire continued to make opportunistic purchases of Occidental Petroleum during the third quarter, snapping up shares any time the price dropped below $60.
But, while much has been made of Buffett’s OXY 0.00%↑ obsession, his growing stake in Chevron has flown comparatively under the radar.
Chevron has quietly become the third-largest holding in Berkshire’s massive investment portfolio — with another 3.9 million shares added in Q3 — passing Coca-Cola and trailing just Apple and Bank of America.
That’s rarefied air for a position largely built in 2022.
Between Berkshire’s significant stake in Chevron and its 20+% ownership of Oxy, Buffett is really pushing in his chips on the oil industry’s continued success.
(3) Lots of smaller moves
TSMC will get all of the press, but Berkshire also opened two other new positions: Louisiana-Pacific Corp. and Jefferies Financial Group. Neither investment is particularly large — with Jefferies clocking in at a paltry $12 million — which might make these Ted or Todd picks.
Berkshire bought another 12.8 million shares of Paramount Global in the third quarter, boosting its overall stake to about 15% of the streamer’s Class B (non-voting) stock. PARA 0.00%↑ got a nice 5% Buffett bounce on the news.
Notable cuts: Berkshire sold 8.2 million shares of Activision Blizzard, 10.1 million shares of BNY Mellon, and 42 million shares of U.S. Bancorp. And, thanks to a regulatory filing last week, we learned that Buffett and co. have sold another 25 million shares of USB 0.00%↑ in the fourth quarter, too.
Okay, this isn’t from the 13F, but a recent filing out of Hong Kong says that Buffett sold another 5.78 million shares of BYD. That reduces Berkshire’s overall ownership of the Chinese EV maker to just 16.62%. (Earlier this summer, it was over 20%.) Are we witnessing a long, drawn-out goodbye to BYD or is Buffett just locking in some profits?
Earlier this week, Charlie Munger granted a rare interview to CNBC’s Becky Quick about the crypto collapse spurred by FTX’s bankruptcy — and, as usual, he didn’t mince words.
It pains me that, in my own country, I see people, who were once regarded as very reputable people, helping these things exist. This is a very, very bad thing. The country did not need a currency that’s good for kidnappers and so on.
There are people who think they gotta be in on every deal that’s hot and they don’t care whether it’s child prostitution or Bitcoin. If it’s hot, they want to be in on it. I think that’s totally crazy. Reputation is very helpful in financial life and to destroy your reputation by associating with scum balls and their scum ball promotions is a huge mistake.
You’re seeing a lot of delusion. It’s partly fraud and partly delusion. That’s a bad combination.
Nobody’s going to invent a new thing [where] every twelve-year-old kid can be a billionaire or something. He just calls it Munger-coin and starts trading it. It’s crazy. It’s demented.
Full disclosure — If Munger-coin ever happens, I’m buying some.
The danger flags are wagging so clearly. A guy says, “I’m going to sell you plenty of nothing and nothing’s plenty for you.”
How can you hear that and not think that this is a big joke? But people think this is a real asset. It’s not a real asset.
On the upside of blockchain technology:
Once you’ve got a good idea, it’s much easier to push that to wretched excess. That’s why good ideas, carried to wretched excess, become bad ideas.
Quick also asked a question about Elon Musk and Tesla. And, while Charlie has criticized Musk in the past, he was mostly complimentary here.
I was certainly surprised that Tesla did as well as it did, but I do not equate Tesla with Bitcoin.
Tesla has made some real contributions to civilization. Elon Musk has done some good things that other people couldn’t do.
We haven’t had a successful new auto company in a long, long time. What Tesla has done in the car business is a minor miracle.
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Disclosure: This is not financial advice. I am not a financial advisor. Do your own research before making any investment decisions.