Following the moves of a billionaire investor brings no guarantee of riches, but the amount of money Warren Buffett moves around is always newsworthy.
Buffett’s Berkshire Hathaway, its most recent 13-F filing, shows big support for Verizon and Chevron while trimming its holdings in Apple and JP Morgan.
Of course, these buy/sell activities came before the end of 2020, so his interests since then are unknown.
Here’s a closer look, with help from someone who knows Buffett well.
Eric Schleien, founder and CEO of Granite State Capital Management and host of “The Intelligent Investing Podcast,” talked about the data with Business Insider.
On Verizon: “You get a dividend yield higher than a government bond,” he said. “The company has consistently high returns on equity and you’re getting it for 10 times earnings. There’s also upside for the 5G rollout.”
On Chevron: “It’s a well-managed, big oil company that will obviously do well if oil bounces back,” Schleien said. “May just be an alternative for cash the way he saw buying ExxonMobil.”
On drug companies, Berkshire increased stakes in three, including $477 million in Merck and $455 in AbbVie, but sold Pfizer, probably because Buffett believes it was no longer a bargain, Schleien said, after Pfizer saw a leap of 20% last quarter.
On bank stocks: A decreasing commitment in JPMorgan and Wells Fargo was likely due to the need to key on Bank of America, Schleien said. In the third quarter of 2020, Berkshire bought more than $2 billion of Bank of America stock.
“He wants to be concentrated in the bank he likes the most, which it seems is Bank of America,” Schleien told Business Insider. “There may also be more upside to normalized returns on equity than over JPMorgan.”