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Rupert Hargreaves
Rupert Hargreaves
Articles (1187)  | Author's Website |

Berkshire Buys Amazon.com, But Likes JPMorgan More

Berkshire's 13F tells us that Warren Buffett likes JPMorgan more than Amazon.com

Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B)'s much-awaited 13F form was made public towards the end of last week, finally revealing how much stock Warren Buffett (Trades, Portfolio)'s conglomerate had acquired in online retailer Amazon (NASDAQ:AMZN) during the first quarter of 2019.

Berkshire's Amazon buy

According to the filing, Berkshire owned around 483,000 in the online giant at the end of March, a holding worth around $860 million according to the filing. A position worth nearly $1 billion might be a substantial stake for most hedge funds and mutual funds, but for Berkshire, this is just pocket change. In fact, the position accounted for just 0.43% of the conglomerate's near $200 billion stock portfolio at the end of March, making it one of the smallest positions.


It's important to remember that 13Fs are backward-looking documents and only tell what was in funds' portfolios at the end of each quarter. Further, these documents to don't give the whole picture, only containing equity positions, and not detailing credit, cash or other investment holdings. Still, they do give an interesting insight into where managers are finding value in the market at present.

Aside from Berkshire's Amazon buying, the conglomerate also increased its positions in several other key holdings during the first three months of 2019.

JPMorgan buying

By far the largest addition to the portfolio was a near 20% increase in Berkshire's ownership of JPMorgan Chase & Co (NYSE:JPM).

Buffett has long been a fan of this global banking institution, frequently praising management's capital allocation skills and growth of the business. He has also previously said that JPMorgan is one of the few stocks he holds in his personal portfolio, alongside Berkshire of course.


It would appear that the Oracle of Omaha took advantage of the stock's decline during the first quarter of 2019 to add to his holdings -- for the Berkshire portfolio at least. Shares of the bank dropped to a low of around $93 towards the end of 2018, and have trended steadily higher over the past five months. Buffett increased his holding by around 9.5 million shares, taking the total holding to 59.5 million shares, a position worth $6 billion at current prices. Following this buy, 3% of Berkshire's portfolio is now allocated to the bank, making it the eighth-largest holding. This time last year, there was no JPMorgan in the Berkshire portfolio.

Would Berkshire buy an airline?

Another stock Buffett was busy buying last quarter was Delta Air Lines (NYSE:DAL). Berkshire boosted its position by 5.5 million shares or 8.2% to $3.7 billion. This position accounts for 1.8% of the overall portfolio.

Berkshire owns 10.8% of the airline, which has sparked rumors that Buffett could be interested in buying the rest of the business he does not own. This is certainly an interesting theory, especially as this would be a relatively small deal for the conglomerate. With a market capitalization of just under $36 billion at the time of writing, buying Delta would only make a dent in Berkshire's $100 billion-plus cash pile. But buying shares of an airline is very different to operating one. Buffett might not be interested in exposing Berkshire to the kind of volatility the airline industry has typically seen by acquiring the rest of the business.

PNC Financial Services (NYSE:PNC) was another stock Buffett was actively buying during the first quarter of this year. PNC has a strong track record of creating value for investors. Its earnings per share have more than doubled, and the dividend has grown at an average annual rate of 11% since 2012. Book value per share has grown at an average annual rate of 6.3% over the past five years. Even after adding nearly 10% over the past few months, the stock is still selling at just 1.2 times book and 11.3 of earnings. These metrics indicate Berkshire's money managers see value here.

Disclosure: The author owns shares in Berkshire Hathaway.

Read more here: 

What Is the Value Proposition? 

Value Investors Need to Think Differently Than the Rest of the Market 

Narrowing Down Your Opportunity Set: How the Best Investors Do It 

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About the author:

Rupert Hargreaves
Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.

Visit Rupert Hargreaves's Website

Rating: 4.0/5 (1 vote)



Vgm - 1 year ago    Report SPAM

Thanks, Rupert.

i think it's important to keep in mind that while Buffett himself bought JPM, he told us it was Todd or Ted who purchased Amazon. Each of those managers runs a $13B portfolio independently of Buffett and of each other, and the AMZN buy of about $1B is therefore a significant percentage (of 13). They are graded mainly on how their own portfolio performs. So my own view is that it's not correct to conclude from the current purchases that Buffett or Berkshire likes JPM more than AMZN. Different Berkshire money managers are expressing different preferences.

Asawhneyy - 1 year ago    Report SPAM

in otherwards diversification

Do i care who bought it if i own BRKB

Rupert Hargreaves
Rupert Hargreaves - 1 year ago    Report SPAM


I see your point and it is something I've explored here -- https://www.gurufocus.com/news/872000

However, Asawhneyy also makes a good point. Todd and Ted do manage portfolios independently, but it's still part of Berkshire. You can argue all day that they're independent of Buffett but shareholders still suffer if they make a mistake. Arguing who bought what seems like a waste of time, the fact of the matter is, Berkshire owns more JPM than AMZN.

Vgm - 1 year ago    Report SPAM

Thanks, Rupert. We agree that for Berkshire overall, it's unimportant who bought what. That's clear. And, yes, they own more JPM than AMZN.

But unless the same person was making all the decisions or Todd, Ted and Buffett were collectively deciding on purchases, then logically we cannot conclude what "Berkshire prefers". They all work independently and Buffett with far greater resource. What we see are individual preferences.

i find it interesting to look at what Todd/Ted are doing with their money as part of my investing education.

Thanks for the stimulation.

Rupert Hargreaves
Rupert Hargreaves - 1 year ago    Report SPAM

Vgm, you present an interesting point. We know the two managers work independently of Buffett, but we don't know if they also like JPM. They could hold the bank in their portfolios, but we don't know as they're not broken out in 13Fs. Moreover, they say they work independently, but what Buffett does is sure to have an impact on their thinking. Berkshire owns a lot of financials, JPM is one of the best in the space, so I do not think it is totally unreasonable to say that even Todd and Ted were running the show, they might like it more than AMZN. Something to consider anyway.

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