Why Warren Buffett Can't Quit The Old Economy

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At the beginning of March, Berkshire Hathaway put out its 2020 Annual Letter.

This followed the release of Berkshire’s fourth-quarter 13-F filing with the SEC which indicates all of the company stock buys, and sells, in the quarter.

What did we learn about what the world’s greatest value investor was doing with his portfolio?

Selling the Banks and Gold

Berkshire continued to lighten up on its financial holdings, specifically in the banks.

It completely exited its position in several banks, including JPMorgan Chase (JPM - Free Report).

It also sold its one gold miner, Barrick Gold (GOLD - Free Report), after just buying it in the second quarter of 2020. That was a very quick trade.

Two New Big Old Economy Additions

At the same time, Buffett put some of his cash to work by buying new positions in Verizon (VZ - Free Reportand Chevron (CVX - Free Report), both old economy stocks.

Verizon is trading with a forward P/E of 10.9. It’s cheap.

It’s a value stock but it has low revenue and earnings growth.

Chevron had sunk again in the fourth quarter of 2020 before the news of the Pfizer vaccine lit a fire under the energy stocks. It was the perfect time to buy it as shares were on sale.

Chevron pays a dividend that is considered to be safe, for now. It’s yielding 5% even after the big run in the stock.

Buffett Has a Long, Winning History in the Old Economy

Chevron isn’t the first energy company Buffett has owned. Berkshire already owns some energy of its own.

Additionally, the portfolio owned Occidental Petroleum as recently as last year.

Berkshire also owns the largest railroad in America in BNSF.

In the annual letter, Buffett described it as being one of the company’s four “crown jewels.”

BNSF was founded in 1850.

It doesn’t get much more “old economy” than a railroad.

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Disclaimer: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

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