Berkshire Added $4 Billion Alphabet Stake and Further Pared Apple Stock
Warren Buffett’s conglomerate was a net seller of stocks during the third quarter, but did add a position in Google’s parent company
Warren Buffett’s Berkshire Hathaway added Google parent company, Alphabet GOOGL -0.78%decrease; red down pointing triangle, to its portfolio during the third quarter and further shrunk its stake in Apple.
The Omaha, Neb., company disclosed its stockholdings in a regulatory filing Friday afternoon. Shares of Alphabet gained 1.9% in after-hours trading.
Berkshire sold $12.5 billion of equity securities during the September quarter, while buying $6.4 billion, marking its 12th consecutive quarter as a net seller of stocks. And for the fifth-straight period, the company refrained from repurchasing its own shares.
Friday’s filing came as Berkshire investors and observers begin to count down the final days of Buffett’s long run as chief executive and top investor. He plans to hand over the reins to his handpicked successor, Greg Abel, at the end of the year.
Abel will assume command over one of America’s most unusual companies: a large amalgam of businesses ranging from insurance to railroads to candy, along with a sizable investment portfolio that includes the shares of many of the other companies Buffett has long admired.
Buffett wrote in a Thanksgiving letter released Monday that he thinks Abel is “a great manager, a tireless worker and an honest communicator.” Buffett said he plans to keep a significant portion of his Class A shares until shareholders grow comfortable with Abel, and that he will continue writing to shareholders through a yearly Thanksgiving message.
Berkshire purchased 17.8 million shares of Alphabet during the third quarter, according to the filing. The shares were valued at more than $4.3 billion at the end of September. Alphabet recently reported a 16% surge in third-quarter revenue, and like other leading tech companies, is funneling billions of dollars into artificial-intelligence development.
Steven Check, chief investment officer of Check Capital Management and a Berkshire shareholder, says the company might have bought Alphabet’s stock in part because it is one of the cheaper “Magnificent Seven” Big Tech shares. His firm also owns Alphabet shares, with the Google-parent being its second-largest holding behind only its Berkshire position.
“It’s not surprising that’d be the one that they would buy,” Check said.
Apple shares recently traded at about 33 times its projected earnings over the next 12 months, according to FactSet. In comparison, Alphabet recently traded at a multiple of 25 times.
Berkshire sold 41.8 million shares of Apple, marking the second straight quarter the company has reduced its stake in the iPhone maker. The stock was little changed in late trading after the disclosure.
News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services.
American Express, Apple, Bank of America, Coca-Cola and Chevron remained Berkshire’s largest holdings.
Berkshire also reduced its position in Bank of America and shed all of its D.R. Horton shares. The company increased its stakes in Chubb, Domino’s Pizza, Sirius XM Holdings and Lennar. Berkshire left its positions unchanged in Amazon.com and UnitedHealth, the beleaguered health insurer.
Berkshire Class B shares have gained about 12% this year, below the S&P 500’s around 14% climb.
Institutional investors managing at least $100 million in U.S. stocks and certain other equities must disclose their holdings at the end of each quarter in Form 13F filings with the Securities and Exchange Commission.
Form 13Fs provide an outdated look at stock portfolios, since investors have 45 days to submit the filings. Still, Berkshire’s disclosures are widely parsed by market participants seeking insight into the decisions made by the company’s investing deputies.