Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), the huge conglomerate run by legendary investor Warren Buffett, released its always anticipated 13F filing on Monday afternoon, detailing the company’s portfolio moves from the third quarter of the year. We already knew from Berkshire’s latest earnings report that it had purchased close to $9 billion in stock and sold $5.3 billion worth in the third quarter. But the 13F, which is required for large institutional investment managers, removes the mystery. Let’s take a look.
A key part of Apple’s business
Arguably the most notable move by Buffett and Berkshire in the quarter was their investment in the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company (NYSE: TSM), also known as TSMC. Berkshire purchased roughly 60.06 million shares in the company, amounting to $4.1 billion at the time of the purchase. That equates to a roughly 1.2% stake in the company.
TSMC is a powerhouse in its own right, but it’s also a key supplier for Apple. The consumer tech giant was TSMC’s largest customer in 2021 and made up a quarter of the company’s revenue last year. This year, that number is expected to be even higher, even as TSMC anticipates more room to grow in other sectors such as the auto market.
Apple is also Berkshire’s largest stock holding by far, making up roughly 40% of an equities portfolio worth well over $300 billion. It’s quite common for Berkshire to find stocks through existing companies it operates or owns stock in. For example, the company credits its investment in the cloud storage company Snowflake to the fact that its insurance brand Geico had been one of Snowflake’s clients for some time. We know Buffett and Berkshire really love Apple, so this investment makes perfect sense.
Seven other buys and six sells
In addition to TSMC, Berkshire also purchased shares of seven other companies, two of which were new additions to the portfolio.
The first is Louisiana-Pacific Corp. (NYSE: LPX), a materials supplier for the homebuilding industry. The stock rose more than 10% in after-hours trading. Many homebuilders have struggled to source materials because of supply-chain issues and are also dealing with higher construction expenses. Buying about 5.8 million shares for a stake of more than $300 million may be a way to invest in the industry’s growth.
Berkshire also interestingly purchased a very small stake — $12.8 million — in the investment bank Jefferies Financial Group (NYSE: JEF), which rose 5% in after-hours trading. Investment banks have struggled this year due to a slowdown in equity and debt underwriting. But Jefferies believes it has gained market share recently and trades at a pretty cheap valuation right now, right around tangible book value.
Other buys in the quarter consisted of existing positions. Unsurprisingly, Berkshire continued to keep betting on U.S. oil through its purchases of Occidental Petroleum (NYSE: OXY) and Chevron (NYSE: CVX) in the quarter. Berkshire upped its stake in Occidental by roughly 22.6%.
Berkshire also significantly increased its stake in the large media company Paramount Global (NASDAQ: PARA) by more than 16% in the quarter. Finally, Berkshire increased its holdings in the home furnishing company RH (NYSE: RH) and chemical company Celanese (NYSE: CE) by roughly 8.8% and 6%, respectively.
In addition to the buying, Berkshire sold six stocks in the quarter, including its entire position in the real estate investment trust STORE Capital (NYSE: STOR), which should come as no surprise considering the company is being acquired. Berkshire also significantly trimmed its position in longtime holding U.S. Bancorp (NYSE: USB) and has actually continued to cut that position after the third quarter, according to recent filings.
Other more sizable cuts Berkshire made in the quarter are to Bank of New York Mellon (NYSE: BK), which it trimmed by about 14%, and the video game company Activision Blizzard (NASDAQ: ATVI), about 12% of its existing position. Berkshire made minor trims to holdings Kroger (NYSE: KR) and General Motors (NYSE: GM).
The upshot of all the activity
Berkshire definitely made some moves in the third quarter, but less so than it would appear. The biggest move was acquiring a stake in TSMC and selling a big position in U.S. Bancorp. Selling STORE Capital made sense, and buying more of the oil stocks has been an ongoing theme this year.
While Berkshire did make some notable cuts, Buffett and the rest of the company could simply be right-sizing the portfolio to prepare for a tougher economy in 2023. However, it will be worth monitoring if Berkshire eventually moves to fully exit any of the holdings it sold, like U.S. Bancorp, which would certainly be possible.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Activision Blizzard, Apple, Berkshire Hathaway (B shares), Jefferies Financial Group Inc., STORE Capital, Snowflake Inc., and Taiwan Semiconductor Manufacturing. The Motley Fool recommends RH and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.