Every quarter, investors globally eagerly await the quarterly shareholding disclosure of major investors and hedge funds to get a snapshot of the positions that they have entered into or sold for the previous quarter.
To do this, they look at the Form 13F which must be filed within 45 days of the quarter end, i.e. for trades occurring between 1 April 2022 to 30 June 2022, this must be reported by 15 August 2022. The form is filed to the US Securities and Exchange Commission as is required to be filed by all investment mangers with at least $100 million in assets under management.
Warren Buffett is one of the world’s largest investor with a disclosed equity portfolio of just over $300 billion at the end of 2Q22 (down from $363 billion in 1Q22) and with one of the best long term performance in recent history, hence many investors look at what he bought and sold in an attempt to mimic his investments.
You may refer here for Buffett’s positions at 2Q22 and compared to 1Q22.
What did Warren Buffett buy?
Before we go into details, it is first worth noting that Buffett did not enter into any new positions. He has simply added onto existing positions which shows that he has maintained confidence in these positions.
1) Ally Financial Inc (NYSE:ALLY)
Ally Financial is a new stake built up this year by Buffett with 30 million shares worth about $1 billion at the end of 2Q22 from 8.9 million shares at the end of 1Q22.
Although it is not a significant stake when considering the size of Buffett’s equity portfolio, as Ally is the largest direct to consumer digital bank with a large presence in the automotive industry, this is one stock to watch considering that Buffett disposed bank stocks such as Wells Fargo.
2) Occidental Petroleum Corp (NYSE:OXY)
Occidental Petroleum is the stock that Buffett has been most actively purchasing in 2Q22. He added 22.2 million shares and held a total of 158.5 million shares. At $59 each, the stake is worth just over $9.3 billion.
As of 9 August 22, He added an additional 29.5 million shares, bringing his total shares to 188 million shares or just over 20% of the company, worth over $12 billion.
Buffett also holds $10 billion of Occidental’s preferred stocks and nearly 84 million warrants which he can exercise at $59.62.
On 19 August 22, Buffett received approval from the Federal Energy Regulatory Commission to purchase up to 50% of Occidental, this is one stock that will likely see more purchases from Buffett
3) Celanese Corp (NYSE:CE)
Celanese is another new stake built up this year by Buffett with 9.1 million shares worth about $1.1 billion at the end of 2Q22 from 7.9 million shares at the end of 1Q22.
Celanese is not in an industry that Buffett commonly invests in. Celanese is a manufacturer of advanced engineered materials, most notably polymers. The company produces acetate, vinyl and acetyl products for a wide variety of commercial applications. Celanese is heavily tied to both the auto and medical markets, but its products are also used in common consumer goods.
Two possible reasons for Buffett’s investment is the low valuation as the stock is trading at a P/E of 6.5 and Celenese’s acquisition of DuPoint’s Mobility & Materials Business for $11.0 billion in cash. As the acquisition is large for Celenese with a current asset base of only $12.7 billion and would require Celenese to take on a massive amount of debt, Buffett is expecting that the potential synergies and free cash flow would pay off.
4) Paramount Global (NASDAQ:PARA)
Paramount is another new stake built up this year by Buffett with 78.4 million shares worth about $1.9 billion at the end of 2Q22 from 68.9 million shares at the end of 1Q22. This is a sizeable stake of over 12% of the company.
With a low P/E of about 5.1 times and Paramount paying $1.5 billion to renew its US media rights to the Champions League football matches for 6 years, doubling the size of its previous contract and beating the likes of Amazon and Disney’s ESPN in the bid, Buffett may be seeing some potential in Paramount Global.
5) Markel Corp (NYSE:MKL)
Markel is also a new stake built up this year by Buffett with 467k shares worth about $605 million at the end of 2Q22 from 420k shares at the end of 1Q22.
Markel is now being hailed as the next Berkshire or a mini Berkshire as it operates in the same insurance industry and also has an investment portfolio that has more than tripled over the last decade.
Referring to Markel’s 13F, its biggest position is ironically Berkshire and it also holds positions in stocks such as Alphabet, Home Depot, DiaGeo, Deer, Amazon, Visa, Disney and Apple.
6) McKesson Corp (NYSE:MCK)
McKesson is also a new stake built up this year by Buffett with 3.2 million shares worth about $1 billion at the end of 2Q22 from 2.9 million shares at the end of 1Q22.
McKesson is a pharmaceutical distribution supply chain, healthcare services, and medical supplies & equipment company and the company has performed well this year as it is resilient to cost inflation and supply chain disruptions which could be the reason Buffett bought into this stock.
7) Activision Blizzard (ATVI)
Buffett has about 68.4 million shares of ATVI worth about $5.3 billion at the end of 2Q22 from 64.3 million shares at the end of 1Q22.
Buffett has previously explained that the reason for his investment is tactical in nature as ATVI is trading significantly below Microsoft’s all cash offer price of $95 to buy up the company. He explained that expects for the deal to be approved by the regulators and views the risk to reward ratio as favourable.
We also previously covered the acquisition of ATVI by Microsoft and introduced a few trading strategies for ATVI.
8) Chevron Corp (NYSE:CVX)
This is not a new position and Buffett probably added on this stock as he expects Oil prices to remain elevated. He has 161.4 million shares of Chevron worth about $23.3 billion at the end of 2Q22 from 159.2 million shares at the end of 1Q22.
9) Apple Inc (NASDAQ:AAPL)
Apple is Buffett’s biggest position and him continuing to add on his position shows his faith in the company. Buffett has about 894.8 million shares of Apple worth about $122.3 billion at the end of 2Q22 from 890.9 million shares at the end of 1Q22.
The $122.3 billion value was computed when Apple’s share price was at $136.7. With Apple currently trading above $170, his stake is currently worth more than $152 billion.
This large stake accounts for more than 40% of his total portfolio which further shows his conviction in Apple.
What did Warren Buffett sell?
Buffett has said in the past that there are only two reasons to sell a stock – because something better has come along or the situation as changed.
Given that he is sitting on about $105 billion of cash, we think that for most of his smaller positions, it is likely that the situation has changed.
1) Verizon Communication (NYSE:VZ)
Buffett had as much as 158.8 million shares in Verizon as of 4Q21 before reducing the stake to 1.4 million as at 1Q22 and finally selling it in its entirety by the end of 2Q22. This was not only a sizeable stake that was worth more than $8.4 billion as at the end of 4Q21 but it was also relatively new as the stake was built since 3Q20. This is unusual as Buffett usually does not trade on a short term basis and it could be a case of something better coming along.
2) Royalty Pharma Plc (NASDAQ:RPRX)
Buffett had as much as 8.6 million shares in Royalty Pharma as of 4Q21 before reducing the stake to 1.5 million as at 1Q22 and finally selling it in its entirety by the end of 2Q22. This was a small stake that was worth about $340 million as at the end of 4Q21.
3) Store Capital Corp (NYSE:STOR)
Buffett had as much as 24.4 million shares in Store capital as of 4Q21 before reducing the stake to 14.8 million as at 1Q22 and then lowering his stake to 6.9 million shares at the end of 2Q22. The stake at the end of 2Q22 was worth $181 million which is small by his standards.
4) General Motors (NYSE:GM)
This is an interesting sell down as Buffett had 60.0 million shares in GM as of 4Q21 and actually increased his stake to 62.0 million as at 1Q22 and before paring it down by 9.2 million shares to 52.8 million shares at the end of 2Q22.
It is hard to pin point a reason for this about turn as it is common knowledge that auto companies are facing keen competition from Electric Vehicles and are all attempting to keep up and compete by being more cost efficient and by starting to manufacture electric vehicles.
GM is turning around a corner as it has just reinstated its quarterly dividend at $0.09/share after more than two years and increased the size of its buyback program from $3.3 to $5 billion.
5) Kroger Co (NYSE:KR)
Buffett had as much as 61.4 million shares in Kroger as of 4Q21 before reducing the stake to 58.0 million as at 1Q22 and then lowering his stake to 52.9 million shares at the end of 2Q22. The stake at the end of 2Q22 was worth $2.48 billion which is not that small.
This could be a case of a selling where the situation has changed as Kroger operates supermarkets and department stores in the US and is highly susceptible to the impact of inflation as consumers reduce their spend.
6) US Bancorp (NYSE:USB)
Buffett had 126.4 million shares in US Bancorp as of 4Q21/1Q22 before reducing the stake to 119.8 million as at 2Q22. The stake at the end of 2Q22 was worth $5.5 billion. Although a higher interest rate environment is known to beneficial for banks, Buffett has been paring his stakes in banks. This could be due to the negative concerns over a potential recession and the impact of a potential recession on banks.
Closing statement
It looks like Buffett has been busy this quarter, deploying roughly $6 billion and selling roughly $1.5 billion in shares. This is not as much as 1Q22 where he deployed more than $51 billion.
As Form 13F are only filed 45 days after the quarter end, there could be a possibility that the data is outdated so investors should take note of this fact when referring to 13Fs. Also, although Buffett tends to have a longer holding period as a long term investor, he is also known to sell his positions when the investment thesis changes.
