Berkshire Hathaway’s Latest Equity Positions

by Warren Seah

Berkshire Hathaway, the renowned investment firm led by CEO Warren Buffett, has recently made some notable changes to its equity portfolio. In a regulatory filing known as a 13-F, it was revealed that Berkshire took on new positions in the homebuilding industry, particularly with industry leader D.R. Horton. At the same time, the firm reduced its stake in General Motors and completely eliminated its holding in McKesson.

Changes in Holdings

During the second quarter, Berkshire Hathaway increased its existing position in Capital One Financial while decreasing its position in Celanese. These moves showcase Berkshire’s continuous evaluation and adjustment of its equity portfolio.

Reduced Stake in General Motors

One significant change in Berkshire’s portfolio is the reduction of its stake in General Motors (GM) by 45%. The firm now holds 22 million shares of GM, valued at approximately $750 million. This decision was made due to limited profitability stemming from the investment made almost a decade ago when GM shares were around $30 each. Considering that GM is currently trading at around $34 per share, the investment hasn’t yielded substantial returns.

The Influence of Buffett’s Lieutenants

It is believed that the decision to invest in GM was made by one of Buffett’s two investment lieutenants, Todd Weschler and Todd Combs. These trusted individuals oversee a portion of Berkshire’s equity portfolio, accounting for about 10% of the total value. Buffett himself manages approximately 90% of Berkshire’s equity holdings, which amount to an impressive $350 billion. Nonetheless, Buffett has shown little interest in the fiercely competitive auto business.

Embracing the Homebuilding Industry

In contrast to the auto sector, Buffett has a fondness for the homebuilding industry. Berkshire Hathaway has recently acquired around 6 million shares of D.R. Horton (DHI), the largest homebuilder in the United States. This position is now valued at over $700 million. Additionally, Berkshire has taken smaller positions in homebuilders Lennar (LEN) and NVR (NVR), valued at less than $20 million and approximately $70 million, respectively.

Berkshire’s Housing-related Businesses

It’s worth noting that Berkshire already has a strong presence in the housing market. The firm owns Clayton Homes, the leading producer of manufactured homes, as well as other housing-related businesses like Shaw, a prominent manufacturer of carpeting and flooring, and Benjamin Moore, a well-known name in the paint industry.

Overall, Berkshire Hathaway’s latest moves highlight their strategic approach to investing, capitalizing on opportunities in the thriving homebuilding industry while adjusting their holdings in other sectors.

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