On Wall Street, Berkshire Hathaway(NYSE:BRK.A)(NYSE:BRK.B)CEO Warren Buffett is in a class of his own. Since taking the reins in the mid-1960s, he has overseen a more than 5,700,000% increase in his company's Class A stock (BRK.A) and seen Berkshire become one of only 10 publicly traded companies to reach the psychologically important market capitalization of $1 trillion. plateau.
With the aptly named “Oracle of Omaha” which revolves around the benchmark S&P500It's really no surprise that professional and retail investors eagerly await records showing which stocks Buffett and his top advisers, Todd Combs and Ted Weschler, bought and sold.
Missing the morning scoop? Wake up with Breakfast News in your mailbox every market day. Register for free »
Warren Buffett, CEO of Berkshire Hathaway. Image source: The Motley Fool.
Quarterly Form 13F filings with the Securities and Exchange Commission (SEC) generally make it easy to follow in Buffett's footsteps. A 13F is a required filing for institutional investors with at least $100 million in assets under management, which describes their buying and selling activity from the previous quarter. Berkshire Hathaway's investment portfolio tipped the scales at nearly $303 billion as of market close on December 3.
While the 13Fs provide invaluable data and information, Berkshire Hathaway's 13F fails to tell the whole story. There is one stock that the Oracle of Omaha has invested almost $78 billion in (at cost) since mid-2018, but it's not something you'll find listed in Berkshire's 13Fs. However, this is the stock Buffett is most likely to buy in 2025.
When the Berkshire chief released his annual letter to shareholders earlier this year, he alluded to the fact that eight companies had “undefined” stakes. Most investors are probably aware Coca-Cola And American Expresswhich have been part of the Berkshire Hathaway portfolio since 1988 and 1991 respectively. However, Buffett's letter also included Western oil and its five Japanese trading houses in the mix.
Oddly enough, Berkshire Hathaway's two biggest stocks heading into 2024, Apple(NASDAQ:AAPL) And Bank of America(NYSE:BAC)were not listed in Buffett's last annual letter as permanent holdings – and recent trading activity in both stocks demonstrates this.
Over the past year (ending September 30), Buffett sent more than 615 million Apple shares to the chopping block, representing a 67% reduction. Apple is a stock that Buffett has invested more than $30 billion in at cost since the first quarter of 2016. At Berkshire's annual shareholder meeting in May, Buffett suggested that locking in gains with Apple was a way to benefit from historically low corporate taxes. rate.
Meanwhile, Warren Buffett has divested more than 266 million shares of Bank of America (BofA) since July 17, based on available data from Form 4 filings. This type of filing is required when Berkshire buys or sells shares of a public company in which it owns at least 10%. Since Berkshire now owns less than 10% of BofA's outstanding shares, it is no longer required to alert investors via Form 4 each time it sells shares.
Over the past eight quarters, Berkshire Hathaway's brightest minds, led by Buffett, have collectively sold $166.2 billion more in shares than they bought. This seems to be a clear warning to Wall Street: the stock market is historically expensive, and value is getting harder to find with each passing quarter.
But there's one stock that Warren Buffett is almost certain to buy in 2025, especially since Berkshire Hathaway has a record $325 billion in cash.
Image source: Getty Images.
While there are some notable value stocks in Berkshire Hathaway's portfolio, a few of them have been purchased recently by the Oracle of Omaha and his team (e.g. Sirius XM Holdings), the stocks Buffett is most likely to buy in 2025, and which won't be found in Berkshire's 13F, are (drum roll) shares of his own company.
Before July 2018, Warren Buffett had no way to grow his company's cash flow through buybacks. The rules governing stock buybacks required Berkshire Hathaway shares to trade at 120% or less of book value for buybacks to take place. Unfortunately for Buffett, his company's shares have never fallen below this threshold.
On July 17, 2018, Berkshire's board of directors changed the repurchase criteria to give the company's head more freedom to repurchase shares. Under the new rules, buybacks were allowed without a cap or end date as long as Berkshire Hathaway had at least $30 billion in cash, cash equivalents and U.S. Treasuries on its balance sheet, and Warren Buffett believes his company's stock is inherently cheap. This last criterion is deliberately vague to give Buffett the freedom to buy back shares at will.
For 24 consecutive quarters since changing these criteria, Warren Buffett has repurchased shares of his company. The cumulative value of these buybacks is around $78 billion, far more than he spent to buy shares of Apple, Bank of America and Occidental Petroleum. on a combined basis.
Interestingly, the quarter ended in September marked the first time since changing buyback rules that Warren Buffett doesn't give the green light to any share buyback. This is likely because Berkshire shares are trading at a 60-70% premium to book value, representing its highest price-to-book value in about 16 years. A staunch value investor, the Berkshire chief decided to do nothing.
However, having $325.2 billion in cash in Berkshire Hathaway's coffers should give the Oracle of Omaha the freedom to be a little more flexible in its perception of value – at least when it comes to shares of his own company. With Buffett buying back stocks for 24 consecutive quarters leading up to the most recent quarter, it seems logical that Berkshire Hathaway is the stock he's virtually guaranteed to buy at some point (if not every quarter) in 2025.
Have you ever felt like you missed the boat by buying the best performing stocks? Then you will want to hear this.
On rare occasions, our team of expert analysts issues a “Doubled” actions recommendation for businesses that they believe are on the verge of collapse. If you're worried that you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled down in 2009,you would have $376,324!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $46,022!*
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $491,327!*
Right now, we're issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
American Express and Bank of America are advertising partners of Motley Fool Money. Sean Williams holds positions in Bank of America and Sirius XM. The Motley Fool holds positions and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Mad Motley has a disclosure policy.
