Like any other hedge fund with more than $100 million of assets under management, Warren Buffett (Trades, Portfolio)'s company has to report the stocks it owned at the end of each quarter to the Securities and Exchange Commission via one of these forms.
However, investors should note that the report only details Berkshire's equity portfolio at a specific point in time. It does not tell us anything about any other investments the Oracle of Omaha decided to make during the quarter. Further, it does not tell us why Buffett made these trades, so relying on the details to make investments is not a good strategy.
In the second quarter of last year, Berkshire reported a new position in Barrick Gold Corp. (GOLD, Financial). At the time, many commentators speculated that this trade indicated Buffett had become bullish on gold after decades of staying away from the yellow metal.
But this missed the point. We know from previous comments from the billionaire investor that any investment worth less than $1 billion was probably initiated by one of his portfolio managers, Todd Combs and Ted Weschler. Barrick was a less than $1 billion position.
What's more, we now know that this position was not a long-term holding. After acquiring just under 21 million shares in the second quarter of 2020, Berkshire reduced its holding by 43% in the third quarter.
We now know that whoever initiated this position decided to eliminate it entirely in the fourth quarter of 2020. If an investor bought the stock when the news was announced and then sold it based on the recent update, they would be sitting on a loss of around 10%, excluding dividends.
As this position is worth more than $100 billion, we can assume it was the Oracle of Omaha who decided to pull the trigger here. He reduced the position by 57 million shares, freeing up a total of $7.9 billion at Apple's current price.
We can only speculate as to why Buffett decided to take this course of action. In the past, he has said there are only two reasons why an investor should sell a position, either because there's a better opportunity, or because the facts have changed. He may have also simply been looking to free up some capital to fund other position acquisitions.
New additions to the portfolio in the fourth quarter included Verizon Communications (VZ, Financial) and Chevron Corp (CVX). These are two sizeable acquisitions worth approximately $8.6 billion and $4.1 billion, respectively, at the time of the 13F filing. Verizon is now a top 10 position for Berkshire with a 3.2% portfolio weight.
It would appear Buffett also added to his healthcare holdings. Berkshire boosted its stake in AbbVie Inc. (ABBV, Financial) by 20%, and it is now a $2.7 billion position with a 1% portfolio weight. The Merck & Co (MRK, Financial) was increased by 28%, taking the holding to $2.4 billion with a 0.9% portfolio weight. The conglomerate also added shares of Bristol-Myers Squibb (BMY, Financial), increasing the holding by 11% to $2.1 billion.
Disclosure: The author owns no share mentioned.
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