Warren Buffett’s Latest Stock Trades

Warren Buffett’s latest trades were just revealed via the most recent Berkshire Hathaway Inc. (BRK-B) 13F filing, which is a filing that gives us information on all of the transactions that took place over the fourth quarter of 2019 — the quarter ending December 31 — in the stock portfolio managed by the legendary investor.

This filing can provide some valuable insight into where Warren Buffett thinks the best investments might lie.

Now, it might not make sense to piggyback on his trades and simply buy and/or sell whatever he has because these filings are generally released 45 days after the most recent quarter ended, but it would appear to be an intelligent move to investigate exactly where the most successful investor of all time is (and isn’t) putting his capital to work.

It’s also important to note that Buffett allows two other executives – Todd Combs and Ted Weschler – to authorize smaller transactions, so it’s difficult sometimes to decipher who bought and/or sold what.

Below, I’m going to go over every transaction and give some quick thoughts on each respective company.

I’m going to do my best to infer what each purchase and sale means, but it’s obviously impossible to know exactly what Warren Buffett or his lieutenants were thinking when each transaction was executed.

Let’s take a look!

Please keep in mind this list is for informational purposes only and is not a recommendation to buy any specific stocks.

Purchases

Purchased 648,447 shares of Biogen Inc. (BIIB) – NEW POSITION
Purchased 2,730,304 shares of General Motors Company (GM)
Purchased 18,940,079 shares of Kroger Co. (KR) – NEW POSITION
Purchased 11,465,546 shares of Occidental Petroleum Corporation (OXY)
Purchased 500,504 shares of RH (RH)
Purchased 39,400 shares of SPDR S&P 500 ETF TR (SPY) – NEW POSITION
Purchased 4,261,031 shares of Suncor Energy Inc. (SU)
Purchased 43,000 shares of Vanguard Index FDS (VOO) – NEW POSITION

Sales

Sold 1,200,000 shares of American Airlines Group Inc. (AAL)
Sold 3,683,113 shares of Apple Inc. (AAPL)
Sold 2,240,000 shares of Bank of America Corp. (BAC)
Sold 1,172,193 shares of Bank of New York Mellon Corp. (BK)
Sold 6,348,884 shares of Goldman Sachs Group Inc. (GS)
Sold 4,955,201 shares of Phillips 66 (PSX)
Sold 5,646,012 shares of Travelers Companies Inc. (TRV)
Sold 55,156,100 shares of Wells Fargo & Co. (WFC)

Purchases

Biogen Inc. (BIIB) – Purchased 648,447 shares. 

This is a new position for Berkshire Hathaway.

Biogen Inc. is a global biotechnology company specializing in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide.

Biogen is a classic Buffett play in a lot of ways.

First, the company is high quality across the board.

Revenue has more than tripled over the last decade. Earnings per share is up more than ninefold. The business produces gaudy profitability – net margin is well into the double digits. Growth has been secular. And buybacks have been prodigious.

There’s really not much to dislike here.

Although it doesn’t pay a dividend (something Buffett has a penchant for), the stock looks downright cheap. Every basis valuation metric I look at indicates significant undervaluation. The multiple on cash flow, at only 8.8 right now, is well off of its three-year average of 12.0.

All that said, I don’t think Buffett was behind this one.

The size of the transaction indicates that it was likely Combs or Weschler.

My personal pick in this space has long been Amgen Inc. (AMGN), which has actually been the superior investment over the last five or so years. However, Biogen looks significantly cheaper than Amgen at this point in time (due, in part, to that relative stock underperformance).

General Motors Company (GM) – Purchased 2,730,304 shares. 

This purchase increased Berkshire’s stake by 3.8%, with the position now up to 75,000,000 shares.

General Motors Co. is a multinational company that designs, manufactures, markets, and distributes vehicles and related parts. They also offer financial services.

Berkshire was last seen gobbling up shares in General Motors during Q4 2018. They’ve been quiet regarding this name since then, but they’re back to accumulating.

This is an interesting investment.

The stock looks cheap by most measures. And it offers a fat 4%+ yield.

However, even post-bankruptcy and now operating in a more rational industry, General Motors is still facing difficulties when it comes to putting together some really solid results. Free cash flow, in particular, is concerning. And with the entire industry being upended by the shift to electric vehicles, General Motors will have to continue investing heavily in order to compete in the future.

Kroger Co. (KR) – Purchased 18,940,079 shares.

This is a new position for Berkshire Hathaway.

Kroger Co. is a retail chain that operates as the largest supermarket in the United States by revenue.

This looks like another classic Buffett investment.

It’s an easy-to-understand business model. And it’s not prone to too much disruption, even in the age of e-commerce. We’re talking about groceries here. It’s pretty straightforward stuff.

In addition, the stock is cheap. The P/E ratio is under 15 right now. And the stock spent a good chunk of Q4 2019 (when Berkshire was buying) at an even cheaper level. In an elevated market, that’s attractive. In fact, I selected this stock as an Undervalued Dividend Growth Stock of the Week in October 2019. I was obviously on the same page as Berkshire here.

Plus, the stock offers a solid yield of over 2%. And the dividend is regularly growing.

I think this is a smart investment. Kroger offers quality, value, and yield. Their large size might work against them, however, constraining growth prospects.

As with Biogen, though, I don’t think Buffett was behind this one. It’s a relatively small investment. It’s more likely that Combs or Weschler engineered this investment, although that doesn’t take away from it at all.

Occidental Petroleum Corporation (OXY) – Purchased 11,465,546 shares

This transaction moved Berkshire’s stake up to 18,843,054 shares, an increase of 154% over last quarter.

Occidental Petroleum Corporation is an independent energy exploration and production company, operating as one of the largest O&G companies in the world.

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