This post primarily aims to quench my curiosities in the fastest way. Heavily reliant on my judgement and intuition.
Written from scratch by Meston Ecoa
Findings:
2. BRK makes bad decisions too. Like buying Kraft Heinz or selling Costco.
3. It’s important that a considerable chunk of your money is in the biggest winner. Like Apple for BRK.
4. As an individual investor who doesn’t have to worry about slippage, I should buy the planned amount and sell the planned amount all at once?
5. BRK sold all airline stocks in 2020Q1 when Covid broke out. I didn’t/couldn’t check if he sold before the crash or not.
6. Domain of expertise – BRK sticks to insurance companies, banks, and rarely touches tech stocks. It also means in this day and age, I SHOULD make tech my domain?
Berkshire's Equity Investment Timeline
Introduction
Here I look into Berkshire’s equity investments. It shows all 117 stocks that Berkshire traded from 2014 to 2024Q1. I know that Warren Buffet is a huge advocate of long-term investment. But I wanted to see his investment practices for myself. Data has been compiled by historical 13F filings of Berkshire’s and comparing the balance of each quarter to the previous one.
This table will be shown throughout this post. No source would be mentioned as they are all derived from 13F filings. I checked for stock splits and manually updated the data accordingly for some, but not all, stocks according to a sense-check algorithm I made.
• “Peak % of equity portfolio: 51%”: means Apple accounted for 51% of Berkshire’s equity investments at its peak.
• Blue squares with number: represents size of shares in the corresponding quarter compared to peak shares held, ranging from 0 to 100.
e.g. 2018Q2 100 means this was the quarter with the most number of shares held.
In brief, this is a visualization of Berkshire’s investment timeline of a given stock.
Berkshire never held a lot of different stocks. Usually around 40 for each quarter. In 2014-2024Q1, there were 117 unique stocks that Berkshire held. Note that value in the chart is exclusive of cash. It is the simple sum of all the entries in 13F.
Ultra Long-term - BRK's longest lasting favorites
BRK either really loved these or was in too deep (Kraft Heinz?). These stocks are ultra long holdings that lasts until today, including Kraft Heinz, Coca Cola, American Express, Moodys, Davita Healthcare, and Verisign. Notice how all the boxes say “100” in the color deep blue. This means BRK kept the level of accumulated shares flat.
Source: Reuters, Yahoo Finance
Warren Buffet says in the Reuters article that he overpaid for Kraft in the 2015 merger. Since then, the shares of Kraft Heinz Company fell dramatically. This demonstrates how no one can get every investment right. We win some, we lose some. As long as the winners (e.g. BRK’s Apple investment) overcome the losers, it will be alright.
But of course, ultra long-term investments doesn’t mean forever – although Warren Buffet says his favorite investment period is “forever”. This shows that no love for a company is forever, and perhaps shouldn’t be forever, and should constantly be subject to scrutiny. Long-term investment doesn’t mean “Let’s buy a stock, never look at it for 30 years, and pray.“ These include Wells Fargo, Johnson & Johnson, Mondelez, UPS, USG, Procter & Gamble, Costco etc.
Also I can see that no matter how long a stock has been held, the end is quite abrupt. The divestment of Wells Fargo took more than a year, observable from the long blue right tail. However other ones ended abruptly. This is probably because the Wells Fargo position was too big to unload at once. It shows that if he made up his mind on selling, he is prompt, and does it all at once, if he can. I guess as an individual investor there would be no case where I would have to worry about slippage, so I should buy all at once, and sell all at once, once I have made my decision?
Source: CNBC, CNN, Yahoo Finance
“It emerged from bankruptcy in 2006 with Berkshire’s help. But when the mortgage crisis hit, it needed a $300 million bailout from Berkshire in a deal that gave Buffett’s conglomerate the chance to convert notes into shares. … At last year’s annual shareholder meeting, Buffett called the investment “disappointing.” And last month, Buffett told CNBC it was the first time he can remember Berkshire voting against a director slate at one of its holdings. He said the directors “didn’t represent our interests” about the decision to take that stance. … “For 18 years, it has not worked out that well,” he said.”
“Berkshire Hathaway grew its holdings in the famous retailer from a split-adjusted 710,000 shares worth $32 million at the end of 1999, to 4.3 million shares valued at $1.3 billion in June 2020. Since Buffett sold the company’s shares, Costco stock has soared between 88% and 127% to all-time highs. Costco (COST) shares currently trade at about $734.40. … Fast forward to 2021 and Buffett admitted during a shareholder meeting that selling the company’s shares of Costco was a mistake. … This all goes to show that even he is constantly reassessing his investments however long he has held for.”
This all goes to show that he is constantly reassessing his investments however long it has been held for. He admits that some buys in the past were bad decisions. He admits that some sells in the past were bad decisions. This is important -admitting, moving on, and adapting.
Long-term - 10-Year Horizon
These are not Coca-Cola-long, but still around decade long investments. If I think about the last time I held on to a stock for 10 years, the answer is never. So it says a lot to me. These include Visa, Mastercard, US Bancorp, Goldman Sachs, Bank of New York Mellon, Charter Communications, General Motors, and of course, Apple.
Medium-term - 3-5-Year Horizon
These include Phillips 66, JPMorgan Chase, Verizon, Southwest Airlines, American Airlines, United Airlines, Snowflake, Axalta, etc. It is interesting how Berkshire sold all airline stocks when Covid broke out. He didn’t look at the super long horizon of after Covid, when everything will inevitably be restored again. He just sold it. Some variables, you condone, but some, you just sell.
Short-term
These are just a few of his short-term investments. Could be as short as a quarter to 1-2 years. These include Activizion Blizzard, TSMC, Mosanto, HP, Abbvie, Oracle, Pfizer, etc. The impression of Berkshire I had was that it would not ever do short-term trades. But I guess they do.
Warren talks about his short investment in TSMC in 2023 annual shareholder meeting. He says he doesn’t like the location.
BECKY QUICK: This question comes from Roheet Bellany (PH). “Berkshire bought a substantial position in Taiwan Semiconductor, and contrary to its normal holding timeline, sold almost the entire position within a few short months. While you cited in a CNBC interview that geopolitical issues were the catalyst, these issues were seemingly no different when you acquired that stock. So, what else, if anything, changed in those few months and prompted the firm to offload close to $5 billion worth of Taiwan Semiconductor shares?”
WARREN BUFFETT: Taiwan Semiconductor’s one of the best managed companies and important companies in the world. And I think you’ll be able to say the same thing five, or ten, or 20 years from now. I don’t like its location. And I’ve reevaluated that. I mean, I don’t think it should be any place but Taiwan, although they will be, obviously, opening up chip capacity in this country. And actually, one of our subsidiaries that we got in Alleghany is participating in their Arizona construction activities. But it’s a question of we would rather have the same kind of company. And there’s nobody in the chip industry that’s in their league, at least in my view. And the man that is a 91-year-old or so connected with it, that I think I played bridge with in Albuquerque, and they’re marvelous people, marvelous company. But I’d rather find marvelous people — and I won’t find it in the chip industry. But marvelous people and marvelous competitive position and everything, I’d rather find it in the United States. I feel better about the capital that we’ve got deployed in Japan than Taiwan. I wish it weren’t so, but I think that’s the reality. And I’ve reevaluated that in the light of certain things that were going on. Charlie?
CHARLIE MUNGER: Well, my view is that Warren ought to feel comfortable if he wants to. (Laughter)
WARREN BUFFETT: Yeah, yeah. Put that in the minutes. (Laughter)
Sold and Re-bought
Sometimes they sell and re-buy.
Racking-up
They seem to be racking up these stocks recently – Liberty Media, Chevron, Occidental, Chubb. Onwards below, I have appended as image, all 117 stocks. Feel free to take a look.
Findings:
2. BRK makes bad decisions too. Like buying Kraft Heinz or selling Costco.
3. It’s important that a considerable chunk of your money is in the biggest winner. Like Apple for BRK.
4. As an individual investor who doesn’t have to worry about slippage, I should buy the planned amount and sell the planned amount all at once?
5. BRK sold all airline stocks in 2020Q1 when Covid broke out. I didn’t/couldn’t check if he sold before the crash or not.
6. Domain of expertise – BRK sticks to insurance companies, banks, and rarely touches tech stocks. It also means in this day and age, I SHOULD make tech my domain?
Written from scratch by Meston Ecoa
May contain incorrect data and information
All 117 Equity Investments 2014-2024Q1
