Warren Buffett is a big fan of Verizon stock, the phone business with the annoying commercials from years ago (“Can you hear me now?”), given his huge investment late last year.
The new Verizon stake is big. According to a regulatory filing with the SEC on Feb. 16 revealing buys and sells in Buffett’s Berkshire Hathaway portfolio, Buffett paid $8.62 billion for the 147 million shares. It’s now the No. 6 stock by number of shares held.
Verizon is in line to benefit from the rollout of 5G technology, which likely will boost telecom industry because, as the pandemic cloud lifts, consumers will consider the higher-priced data plans sure to include significant improvement for internet speed.
Even in 2020 when the pandemic forced a severe belt-tightening for consumers, Verizon’s revenue declined only just 2.71% year over year.
The business model is working but there are warning signs.
Unlimited data plans will bring higher revenue but it may not be sustainable, given a likely decline in average revenue per user and the accompanying difficulty of increasing earnings.
Verizon stock had moved from $54.15 on Tuesday to $56.92 by noon ET on Thursday.
Berkshire Hathaway’s Q4 capped an interesting year for Buffett, who also executed $9 billion in stock buybacks in Q3 and $5.1 billion in Q2 and sold all his airline stocks, including Delta Air Lines.
He pulled out of JPMorgan and several major bank stocks but poured $2 billion into Bank of Americain Q3, turning it into his No. 1 stock by number of shares.
At the end of 2020, Berkshire’s stake in Verizon was valued at anywhere from $8.1 billion to $8.5 billion.