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Berkshire Hathaway (BRK.A -0.84%) (BRK.B -0.94%) simply launched its 13F regulatory submitting for the fourth quarter of 2022, revealing what shares Warren Buffett’s conglomerate purchased and offered within the final three months of the 12 months. There was much more promoting than shopping for.
Whereas the corporate did improve its place in some holdings, Berkshire did not add a single new inventory within the interval, hinting that Buffett and Berkshire’s outlook might have soured after happening an enormous buying spree at the start of 2022. Here is what Berkshire was shopping for and promoting to cap off 2022.
A pointy reversal on Taiwan Semiconductor
Considered one of Berkshire’s extra stunning strikes was its resolution to promote roughly 86% of its new stake in Taiwan Semiconductor Manufacturing (TSM 1.93%). Berkshire had simply initiated a greater than $4 billion stake within the big chipmaker within the third quarter.
Whereas Taiwan Semiconductor beat earnings estimates for the fourth quarter, it missed on income, and the corporate considerably in the reduction of its capital expenditure plans for 2023, citing decrease chip demand. Whereas the corporate expects chip demand to bounce again later this 12 months, and whereas the semiconductor trade is meant to be a high-growth trade shifting ahead, one thing actually appears to have drastically modified Buffett and Berkshire’s view on the corporate and the chip trade.
Berkshire additionally slashed its stake in massive regional lender U.S. Bancorp (USB 0.08%) by 91% and reduce its place in massive custodian Financial institution of New York Mellon (BK -0.40%) by 59%. Each are longtime Buffett holdings which have been robust performers over time, however the gross sales are much less stunning given Buffett sold a large quantity of shares in each these shares within the third quarter. Each banks commerce at excessive valuations, and the U.S. banking sector is anticipated to see stress this 12 months as a consequence of rising deposit prices and the affect of a possible recession.
Berkshire additionally offered 12% of its stake in video gaming firm Activision Blizzard (ATVI 0.25%) and 10% of its current place in healthcare merchandise distribution firm McKesson (MCK -0.30%). Lastly, Berkshire barely trimmed its positions in Chevron (CVX 0.77%), Kroger (KR -2.24%), and Ally Monetary (ALLY -1.81%).
Recent investments in 2 new shares
Though Berkshire did not open any new positions within the fourth quarter of 2022, the corporate did improve its place in two shares it purchased for the primary time final 12 months. Berkshire elevated its place in development supplies agency Louisiana-Pacific Corp. (LPX -0.76%) by 21%, though the corporate is certainly not a big place in Berkshire’s portfolio. Berkshire additionally made a small addition to its stake within the massive media firm Paramount World (PARA 0.63%).
Berkshire’s 13F additionally confirmed greater than 333,800 new shares of client big Apple (AAPL -0.42%), which is the most important place in its $352 billion-plus equities portfolio. However do not get too excited — the variety of new shares was equal to the quantity held by insurance coverage firm Alleghany, which Berkshire bought early final 12 months.
What do Berkshire’s strikes inform us?
Like most traders, Buffett and Berkshire’s outlook for the financial system appeared to get grimmer towards the tip of 2022, as many foresaw some type of recession enjoying out this 12 months. It’s doable issues have modified, however a recession can be nonetheless within the playing cards.
I used to be notably confused by Berkshire’s sudden reversal on Taiwan Semiconductor as a result of it simply bought a major stake within the firm just a few months earlier. However general, Berkshire positively stayed conservative and appeared to stay to corporations it is aware of effectively and expects to have the ability to navigate a harder financial system.
Ally is an promoting companion of The Ascent, a Motley Idiot firm. Bram Berkowitz has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Activision Blizzard, Apple, Berkshire Hathaway, and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends McKesson and recommends the next choices: lengthy March 2023 $120 calls on Apple and brief March 2023 $130 calls on Apple. The Motley Idiot has a disclosure policy.
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