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What Did Buffett Buy During the Summer Bear Market?

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  • (0:30) - Learning From Warren Buffett During A Stock Market Sell Off
  • (4:00) - 13F Breakdown: What Was Berkshire Hathaway Buying?
  • (14:50) - What Positions Did Warren Buffett Sell?
  • (27:40) - Big Takeaways From Warren Buffett’s Market Moves: OXY, CVX, BAC, AAPL, USB, BK, C, ALLY, ATVI, CE, VZ, GM, AMZN
  •                 Podcast@Zacks.com

 

Welcome to Episode #294 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

The second quarter 13-Fs are out and we now know what Berkshire Hathaway, led by Warren Buffett, were buying, selling, or not buying or selling, during the quarter.

Just a reminder, that the 13-Fs are filed within 45 days after the end of the prior quarter. By the time we get them, the trades are already “old.”

But the filings still give us insight into what Buffett is doing with the massive Berkshire Hathaway portfolio.

Chevron and Occidental Petroleum: Did the Buying Continue?

1.       Chevron (CVX - Free Report)

Berkshire Hathaway went all in on the oil stocks in the first quarter, when it added to it’s existing position in Chevron buying over $20 billion in shares.

Chevron became the fourth largest position in the portfolio.

In Q2, it dove in again and added another 1% position. Berkshire now owns 8.2% of the company, or 161.4 million shares.

Chevron is yielding 3.6%. Based on the number of shares owned by the end of Q2, Berkshire should get a minimum dividend payout of $229.2 million on Sep 12.

2.       Occidental Petroleum (OXY - Free Report)

Berkshire also continued to add to its Occidental Petroleum position buying $1.4 billion. It now owns nearly 30% of the company if you include the warrants.

Because it is such a large shareholder, Berkshire must disclose its new purchases within 48 hours instead of waiting until the 13-F period. It has also been buying in Q3, in July and August, as the shares have fallen.

Over the last 3 months, shares of Occidental Petroleum are down 7%.

Is this a buying opportunity in Chevron and Occidental Petroleum this year?

Did Buffett Buy More Apple?

3.       Apple (AAPL - Free Report)

Apple is Berkshire Hathaway’s largest equity position with 894.8 million shares worth about $122.3 billion.

Buffett only entered into the position in the first quarter 2016. He has sold some shares over the years in order the cut the weighting of the position but in the second quarter, he actually bought another 3.88 million shares as Apple sold off.

Apple pays a dividend, currently yielding 0.5% but Berkshire owns so many shares it recently received a $208 million dividend payout.

Apple shares have rallied 16% in the last month.

Are the shares now too hot to handle?

Arbitrage and Amazon

4.       Activision Blizzard (ATVI - Free Report)

At the Berkshire Hathaway annual meeting Warren Buffett admitted he was doing an arbitrage trade on the Activision Blizzard/Microsoft deal that was announced earlier this year. Berkshire already had a position in Activision when the deal was announced, but added to it again in the second quarter.

Microsoft bid $95 a share and Activision Blizzard is trading around $80 right now.

If the deal closes, Berkshire will get the difference which is known as the “arbitrage.”

Berkshire now owns 8.3% of Activision Blizzard.

Should you be doing arbitrage on Activision Blizzard too? There’s risk if the deal doesn’t go through.

5.       Amazon (AMZN - Free Report)

Berkshire shocked the world in 2019 when it reported that it had bought shares of Amazon in the first quarter of that year. Buffett had to reassure shareholders that there was actual “value” in the shares.

By June 2022, Amazon shares had sunk 38% on the year. Was Berkshire finally going to add to its small position?

But no, Berkshire did NOT buy in the second quarter. Shares have rallied 25% in the last month so they’re not as cheap as earlier this summer.

Did Berkshire miss out on a buying opportunity in Amazon?

What Else Did Berkshire Hathaway Buy and Sell, or not, in the Second Quarter?

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of AMZN in her own personal portfolio.]

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