Berkshire Hathaway (BRK.A) (BRK.B) just released its 13F regulatory filing for the fourth quarter of 2022, revealing what stocks Warren Buffett’s conglomerate bought and sold in the last three months of the year. There was a lot more selling than buying.
While the company did increase its position in some holdings, Berkshire didn’t add a single new stock in the period, hinting that Buffett and Berkshire’s outlook may have soured after going on a big shopping spree at the beginning of 2022. Here’s what Berkshire was buying and selling to cap off 2022.
A sharp reversal on Taiwan Semiconductor
One of Berkshire’s more surprising moves was its decision to sell roughly 86% of its new stake in Taiwan Semiconductor Manufacturing (TSM). Berkshire had just initiated a more than $4 billion stake in the giant chipmaker in the third quarter.
While Taiwan Semiconductor beat earnings estimates for the fourth quarter, it missed on revenue, and the company significantly cut back its capital expenditure plans for 2023, citing lower chip demand. While the company expects chip demand to bounce back later this year, and while the semiconductor industry is supposed to be a high-growth industry moving forward, something certainly seems to have drastically changed Buffett and Berkshire’s view on the company and the chip industry.
Berkshire also slashed its stake in large regional lender U.S. Bancorp (USB) by 91% and cut its position in large custodian Bank of New York Mellon (BK) by 59%. Both are longtime Buffett holdings that have been strong performers over the years, but the sales are less surprising given Buffett sold a sizable amount of shares in both these stocks in the third quarter. Both banks trade at high valuations, and the U.S. banking sector is expected to see pressure this year due to rising deposit costs and the impact of a potential recession.
Berkshire also sold 12% of its stake in video gaming company Activision Blizzard (ATVI) and 10% of its existing position in healthcare products distribution company McKesson (MCK). Finally, Berkshire slightly trimmed its positions in Chevron (CVX), Kroger (KR), and Ally Financial (ALLY).
Fresh investments in 2 new stocks
Although Berkshire didn’t open any new positions in the fourth quarter of 2022, the company did increase its position in two stocks it bought for the first time last year. Berkshire increased its position in construction materials firm Louisiana-Pacific Corp. (LPX) by 21%, although the company is by no means a large position in Berkshire’s portfolio. Berkshire also made a small addition to its stake in the large media company Paramount Global (PARA).
Berkshire’s 13F also showed more than 333,800 new shares of consumer giant Apple (AAPL), which is the largest position in its $352 billion-plus equities portfolio. But don’t get too excited — the number of new shares was equivalent to the amount held by insurance company Alleghany, which Berkshire purchased early last year.
What do Berkshire’s moves tell us?
Like most investors, Buffett and Berkshire’s outlook for the economy seemed to get grimmer toward the end of 2022, as many foresaw some kind of recession playing out this year. It is possible things have changed, but a recession is also still in the cards.
I was particularly confused by Berkshire’s sudden reversal on Taiwan Semiconductor because it just purchased a significant stake in the company a few months earlier. But overall, Berkshire definitely stayed conservative and seemed to stick to companies it knows well and expects to be able to navigate a more difficult economy.
— Bram Berkowitz
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Source: The Motley Fool