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Welcome to Episode #306 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 13-Fs are out for the third quarter. Remember, these are the SEC forms that the big money managers have to file 45 days after the end of the quarter which indicate what they have bought, or sold, during the prior quarter.
We don’t know when they bought or sold, or at what price, but we do know how big the position was and how many shares were sold.
The Value Investor Podcast always checks in on Berkshire Hathaway’s 13-F. In some quarters, Warren Buffett and his two lieutenants have done very little buying or selling. But with stocks selling off, and some deals out there in 2022, Berkshire has been more active.
Q3 was no different.
Should You Buy Berkshire Hathaway Shares or Buffett’s Trades?
Many value investors like to mimic the trades in Berkshire’s portfolio.
But in 2022, with value stocks back in favor, some investors are asking whether or not they shouldn’t just buy Berkshire Hathaway’s stock itself?
Berkshire Hathaway is more than just the stock portfolio and cash. It owns 62 companies including Dairy Queen, BNSF railroad, Duracell and Benjamin Moore, among others.
Shares of Berkshire Hathaway are up 2.8% year-to-date which is outperforming the S&P 500 which is down 17%. Over the last 5 years, it has also outperformed, gaining 70% versus the S&P’s gain of 54.8%.
But I’m sorry to tell value fans that Berkshire Hathaway isn’t a cheap stock. It trades with a forward P/E of 22.3. It also has a PEG ratio of 3.2. A PEG under 1.0 indicates value.
Purely looking at Berkshire on a valuation basis, it probably shouldn’t be on the short list.
In the third quarter, Berkshire added shares of Taiwan Semiconductor to the portfolio for the first time. It was a sizable position that puts it in as the 10th largest in the portfolio.
Taiwan Semiconductor has an attractive P/E at 12.9. It also pays a dividend yielding 1.7%.
Shares of Taiwan Semiconductor are down 32% year-to-date but they’ve rallied 27% in the last month, after Berkshire had bought in.
Louisiana-Pacific, the buildings product company which makes items for the residential construction industry, was also added to Berkshire’s portfolio for the first time in the third quarter. It’s just a small position, of only 0.1% of the portfolio.
Shares of Louisiana-Pacific have fallen 21% year-to-date. They’re dirt cheap, with a forward P/E of just 5.2.
But are they a trap? Louisiana-Pacific is expected to see earnings decline 12.2% this year and 57.7% next year.
Buffett went all in on Chevron earlier in 2022 but Berkshire added another 2% to the position in the third quarter. Berkshire now owns 8.49% of the company.
Shares of Chevron are up 57% year-to-date but they’re still cheap, with a forward P/E of 9.8. In the third quarter, the shares had pulled back, so it’s not surprising that Berkshire added to its position.
Chevron pays a dividend of 3.1%.
Should you be betting big on Chevron, even after the rally, as Buffett appears to be?
Like with Chevron, Berkshire started aggressively buying Occidental Petroleum earlier this year. But in the third quarter, it jumped in even further, establishing an $11.9 billion position. Berkshire now owns 20.74% of Occidental.
Shares of Occidental Petroleum are up 146.7% year-to-date but remain cheap with a forward P/E of 7.5.
Occidental has been paying down debt with some of its big free cash flow this year but it still pays a base dividend yielding 0.7%.
Berkshire keeps diving into Occidental Petroleum. Should you?
What Else Should You Know About Berkshire Hathaway and its Stock Portfolio?
Tune into this week’s podcast to find out.
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Value Investors: Buy BRKB or Berkshire's Stocks?
Welcome to Episode #306 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 13-Fs are out for the third quarter. Remember, these are the SEC forms that the big money managers have to file 45 days after the end of the quarter which indicate what they have bought, or sold, during the prior quarter.
We don’t know when they bought or sold, or at what price, but we do know how big the position was and how many shares were sold.
The Value Investor Podcast always checks in on Berkshire Hathaway’s 13-F. In some quarters, Warren Buffett and his two lieutenants have done very little buying or selling. But with stocks selling off, and some deals out there in 2022, Berkshire has been more active.
Q3 was no different.
Should You Buy Berkshire Hathaway Shares or Buffett’s Trades?
Many value investors like to mimic the trades in Berkshire’s portfolio.
But in 2022, with value stocks back in favor, some investors are asking whether or not they shouldn’t just buy Berkshire Hathaway’s stock itself?
Is it a deal?
Berkshire Hathaway and its Portfolio: Values?
1. Berkshire Hathaway (BRK.B - Free Report)
Berkshire Hathaway is more than just the stock portfolio and cash. It owns 62 companies including Dairy Queen, BNSF railroad, Duracell and Benjamin Moore, among others.
Shares of Berkshire Hathaway are up 2.8% year-to-date which is outperforming the S&P 500 which is down 17%. Over the last 5 years, it has also outperformed, gaining 70% versus the S&P’s gain of 54.8%.
But I’m sorry to tell value fans that Berkshire Hathaway isn’t a cheap stock. It trades with a forward P/E of 22.3. It also has a PEG ratio of 3.2. A PEG under 1.0 indicates value.
Purely looking at Berkshire on a valuation basis, it probably shouldn’t be on the short list.
Is it worth the premium?
2. Taiwan Semiconductor (TSM - Free Report)
In the third quarter, Berkshire added shares of Taiwan Semiconductor to the portfolio for the first time. It was a sizable position that puts it in as the 10th largest in the portfolio.
Taiwan Semiconductor has an attractive P/E at 12.9. It also pays a dividend yielding 1.7%.
Shares of Taiwan Semiconductor are down 32% year-to-date but they’ve rallied 27% in the last month, after Berkshire had bought in.
Did Buffett buy at the lows?
3. Louisiana-Pacific Corp. (LPX - Free Report)
Louisiana-Pacific, the buildings product company which makes items for the residential construction industry, was also added to Berkshire’s portfolio for the first time in the third quarter. It’s just a small position, of only 0.1% of the portfolio.
Shares of Louisiana-Pacific have fallen 21% year-to-date. They’re dirt cheap, with a forward P/E of just 5.2.
But are they a trap? Louisiana-Pacific is expected to see earnings decline 12.2% this year and 57.7% next year.
4. Chevron Corp. (CVX - Free Report)
Buffett went all in on Chevron earlier in 2022 but Berkshire added another 2% to the position in the third quarter. Berkshire now owns 8.49% of the company.
Shares of Chevron are up 57% year-to-date but they’re still cheap, with a forward P/E of 9.8. In the third quarter, the shares had pulled back, so it’s not surprising that Berkshire added to its position.
Chevron pays a dividend of 3.1%.
Should you be betting big on Chevron, even after the rally, as Buffett appears to be?
5. Occidental Petroleum Corp. (OXY - Free Report)
Like with Chevron, Berkshire started aggressively buying Occidental Petroleum earlier this year. But in the third quarter, it jumped in even further, establishing an $11.9 billion position. Berkshire now owns 20.74% of Occidental.
Shares of Occidental Petroleum are up 146.7% year-to-date but remain cheap with a forward P/E of 7.5.
Occidental has been paying down debt with some of its big free cash flow this year but it still pays a base dividend yielding 0.7%.
Berkshire keeps diving into Occidental Petroleum. Should you?
What Else Should You Know About Berkshire Hathaway and its Stock Portfolio?
Tune into this week’s podcast to find out.