Today unveils Warren Buffett's fourth-quarter investment moves, yet his preferred stock acquisition of choice remains concealed. Here's the rationale.
The much-anticipated day of the first financial quarter has arrived. Amidst an endless parade of financial reports, the February 14th deadline for institutional money managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission (SEC) looms.
Form 13F offers a peek into which stocks the Wall Street's elite and successful asset managers, like Warren Buffett, are purchasing and selling. Although the data might be stale for active hedge funds, it sheds light on the stocks, industries, sectors, and trends that grab the interest of the financial world's top money managers.
Form 13F with the Securities and Exchange Commission (SEC).
No one on Wall Street attracts more attention than Berkshire Hathaway CEO Warren Buffett. In his six-decade reign, he has orchestrated an almost 5,700,000% aggregate return in his company's Class A shares (BRK.A). Buffett's success has inspired countless investors to tag along in search of substantial, long-term gains. By analyzing Berkshire Hathaway's 13F, investors can effectively mimic the investments of Buffett and his top advisors, Ted Weschler and Todd Combs.
While some of Buffett's trading activity for the final quarter has already been revealed, his favorite stock to buy – with a cumulative $78 billion worth of purchases since mid-2018 – won't figure in the Berkshire Hathaway 13F filing once the market bell rings shut.
No billionaire investor garners more attention on Wall Street than
Buffett: Value Hunter in a Pricey Market
BRK.A
Based on Berkshire Hathaway's previous eight quarterly reports, Buffett and his team have been active net sellers of equities. Company financial statements reveal that Berkshire's wisest investment minds have sell-off an aggregate of $166.2 billion more in stock than they've purchased from October 1, 2022, to September 30, 2024.
BRK.B
The stock market's astronomical valuation is likely the primary culprit behind this persisting selling streak. The "Buffett Indicator," which divides the total U.S. stock market capitalization by the country's gross domestic product, recently reached an all-time high when back-tested to 1970.
cumulative $78 billion purchased since mid-2018 -- won't show up in Berkshire's 13F filing after the market close.
Nevertheless, despite the market's high relative valuation, Buffett continued to spot value in select stocks.
sold an aggregate of $166.2 billion more in stock that they've purchased between Oct. 1, 2022 and Sept. 30, 2024.
Satellite Radio Revenue Stream: Sirius XM Holdings
Buffett Indicator," which divides the total market cap of U.S. stocks into U.S. gross domestic product, recently hit an all-time high, when back-tested to 1970.
Thanks to Form 4 filings, we know Buffett has been scooping up shares of satellite-radio operator Sirius XM Holdings (SIRI). Sirius XM generates more than three-quarters of its net sales from subscriptions, making it a legal monopoly. Unlike traditional radio companies, which are heavily reliant on ad revenue, Sirius XM's diverse sales streams enable it to navigate economic turbulence more effectively.
the stock market's relative priciness, Berkshire's chief is still finding value in select stocks.
Oil and Gas Revenue: Occidental Petroleum
SIRI
Form 4 filings also prove Berkshire Hathaway added to its stake in Occidental Petroleum during the final quarter. The nearly 8.9 million shares purchased hiked Berkshire's stake to well above 264 million shares. Although Occidental is an integrated energy company, it generates most of its revenue from its drilling operations. If crude oil prices take a leap, few, if any, oil and gas companies will benefit as much as Occidental Petroleum.
Sirius XM is a legal monopoly that generates more than three-quarters of its net sales from subscriptions. Whereas traditional radio companies are almost wholly reliant on advertising revenue to keep the lights on, Sirius XM has a diverse sales stream that can help it navigate economic turbulence more effectively.
Legal Monopoly Power: VeriSign
OXY
Berkshire's Form 4 filings also show a series of purchases of internet domain-name registry services provider VeriSign during the December-ended quarter. Similar to Sirius XM, VeriSign is a legal monopoly, ensuring impressive pricing power and a predictable operating model. With minimal infrastructure expenses, VeriSign's operating margin stood at 69% over the preceding 12-month period.
generates most of its revenue from its drilling operations. If the spot price of crude oil moves higher, few if any integrated oil and gas companies are going to benefit more than Occidental Petroleum.
Buffett's Favorite Stock: Berkshire Hathaway
Form 4 filings also show a handful of purchases of internet domain-name registry services provider
Historically, Berkshire Hathaway waits until deadline day to release its 13F and publishes it after the closing bell. While investors will be on tenterhooks, eager to unearth what the Oracle of Omaha has been up to, they won't learn about his favorite stock to buy.
VRSN
Detailed purchase activity of Buffett's top pick is revealed in Berkshire's quarterly financial reports, which aren't due for another two weeks. The reason why investors won't notice this stock in today's 13F is because Buffett's favorite purchase has consistently been his own company's shares!
Buffett's top purchase has consistently been shares of his own company!
Before mid-2018, share repurchases were restricted if Berkshire Hathaway's stock fell to or below 120% of its book value. This threshold was never met, resulting in no repurchases before July 2018.
book value. This line-in-the-sand threshold was never met, leading to no buybacks prior to July 2018.
On July 17, 2018, Berkshire's board amended the repurchase rules to grant Buffett the flexibility to buy back shares according to his discretion. The updated rules allow for unlimited repurchases and no expiration date as long as Berkshire Hathaway has at least $30 billion in combined cash, cash equivalents, and U.S. Treasuries on its balance sheet and Buffett believes the stock is undervalued.
repurchased shares of his own company's stock to collective tune of almost $78 billion. He hasn't spent anywhere close to this amount of money buying shares of any other company in
Since 1973, Buffett, the "Sage of Omaha," has purchased almost $78 billion worth of Berkshire Hathaway shares in 24 out of the last 25 quarters. He hasn't invested anywhere near this sum in any other company in Berkshire Hathaway's 44-stock, $299 billion investment portfolio.
Berkshire Hathaway's 44-stock, $299 billion investment portfolio.
Since Berkshire Hathaway does not pay a dividend, Buffett's robust share repurchase program serves as a reward to shareholders. By gradually reducing the company's share count, he boosts their ownership stakes. In essence, it encourages long-term thinking, a value highly regarded by Buffett and his late right-hand man, Charlie Munger.
earnings per share (EPS). Boosting EPS over time can make the company's stock appear more attractive to value-focused investors.
By boosting earnings per share (EPS) over time, share repurchases can heighten a company's stock appeal to value-focused investors. Though investors are eagerly awaiting insights into Berkshire Hathaway's fourth-quarter dealings, remember that details regarding Buffett's favorite stock are still around two weeks away from being unveiled.
- Institutional money managers, including those like Warren Buffett, are required to file Form 13F with the Securities and Exchange Commission (SEC) every quarter, disclosing their investments and selling activities.
- The Form 13F filing deadline for institutional money managers with at least $100 million in assets under management is likely to reveal which stocks Buffett and his team at Berkshire Hathaway have been purchasing and selling in the latest financial quarter.
- Analyzing Berkshire Hathaway's Form 13F filings can provide insights into the investments of Warren Buffett and his top advisors, offering investors an opportunity to mimic their strategies and potentially benefit from their success.
- Despite the high valuation of the stock market, Berkshire Hathaway's Form 13F filings may reveal that Buffett and his team are still actively investing in select stocks, demonstrating their ability to spot value in the market, even during periods of relative priciness.