Berkshire Hathaway reduces Apple stake, buys more Chevron stock

Berkshire Hathaway, the conglomerate led by Warren Buffett, revealed its latest stock moves in a regulatory filing on Tuesday. The company trimmed its stake in Apple, sold its holdings in Paramount and HP, and increased its position in Chevron. The company also kept secret a new investment worth over $1 billion.

Berkshire Hathaway
Berkshire Hathaway

Apple remains the largest holding, but with less weight

Berkshire Hathaway sold 10 million shares of Apple in the fourth quarter of 2023, reducing its stake to 905 million shares, or 5.85% of the outstanding Apple stock. The company still holds Apple as its largest holding, accounting for nearly half of its equity portfolio, but with less weight than before.

The company did not disclose the reason for the sale, but it may have been motivated by profit-taking, diversification, or valuation concerns. Apple shares rose 28% in 2023, outperforming the S&P 500 index, which gained 18%. Apple also reached a market capitalization of $3 trillion in January 2024, making it the most valuable company in the world.

Berkshire Hathaway first bought Apple shares in 2016, and has since added to its position several times. The company has made a huge profit from its investment, as Apple shares have increased more than sixfold since then. The company also receives a hefty dividend from Apple, which paid $3.80 per share in 2023.

Paramount and HP are completely sold, while Chevron is doubled

Berkshire Hathaway also sold its entire stakes in Paramount and HP in the fourth quarter of 2023, exiting two investments that it had made in 2019. The company sold 8.3 million shares of Paramount, the media company that owns CBS, Showtime, and Paramount Pictures. The company also sold 3.7 million shares of HP, the personal computer and printer maker.

The company did not reveal the prices or the gains or losses from the sales, but both stocks performed well in 2023. Paramount shares rose 42%, boosted by its streaming service Paramount+, which reached 50 million subscribers in December 2023. HP shares rose 32%, driven by strong demand for its products amid the work-from-home trend.

Berkshire Hathaway also increased its stake in Chevron, the oil and gas giant, by 50% in the fourth quarter of 2023. The company bought 13.6 million shares of Chevron, bringing its total position to 40.8 million shares, or 2.2% of the outstanding Chevron stock. The company made Chevron its sixth-largest holding, worth $5.4 billion.

The company may have been attracted by Chevron’s low valuation, high dividend, and strong cash flow. Chevron shares traded at 12 times its expected earnings for 2024, lower than the S&P 500 average of 18 times. Chevron also paid a dividend of $5.36 per share in 2023, yielding 5.4%. Chevron also generated $23 billion of free cash flow in 2023, up 54% from 2022.

A new investment remains a mystery

Berkshire Hathaway also disclosed that it made a new investment worth over $1 billion in the third quarter of 2023, but it did not reveal the name or the details of the company. The company requested and received permission from the Securities and Exchange Commission to keep the information confidential, as it may be still building or adjusting its position.

The company hinted that the new investment may involve a bank, finance company, or insurer, as it reported that it spent $1.2 billion on stock in that sector in the third quarter of 2023. The company also said that it did not buy or sell any shares of the new investment in the fourth quarter of 2023.

The market has been speculating about the identity of the new investment, with some analysts and investors suggesting names such as Bank of America, American Express, or Progressive. The company is expected to reveal the name of the new investment in its next quarterly filing, which is due in May 2024.

Berkshire Hathaway is one of the largest and most influential investors in the world, with a market capitalization of $650 billion and a portfolio of 49 stocks worth $320 billion. The company also owns dozens of businesses across various sectors, such as Geico, BNSF, Berkshire Hathaway Energy, and Dairy Queen.

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