Warren Buffett’s Latest Portfolio Reshuffle

By Glenn Dyer | More Articles by Glenn Dyer

Warren Buffett still likes his Apples, but has gone right off IBM, and is losing interest in General Motors, American Airlines and Wells Fargo.

That’s after some major reshuffling in the huge investment portfolio held by Berkshire Hathaway in the December quarter as Warren Buffett and his managers abandoned IBM and topped up the company’s Apple holdings.

In addition they took a stake in a big generic drug maker, and separately, sold off part of its holding in a major oil refiner after running into trouble with the 10% share holding level for a second time (the previous was in Wells Fargo last year).

Berkshire’s 13F filing to the US Securities and Exchange Commission (made by fund managers 45 days after the end of a quarter) showed it had lifted its Apple holdings to 165.3 million shares at the end of December, up 23% from 134 million as of the end of September.

That was a solid play for that quarter, but Apple shares have sold off this year on concerns that we might be seeing Peak iPhone. Apple shares are down 1.1% so far this year and 6.6% so far in February. But they have rallied nearly 8% in the past five trading days as last week’s sell off fades.

Berkshire also continued to dump its IBM holdings, with its stake shrinking to 2.05 million shares at December 31, from 37.03 million three months earlier. IBM is now a memory.

Berkshire Hathaway said it had taken a new stake in Teva the world’s biggest generic drug maker.

Berkshire had 18.9 million shares, or 1.9% of Teva’s outstanding shares as of the end of December 31, and was worth roughly $US358 million,

Berkshire also raised its shareholdings of in banks, BNY Mellon and US Bank, and in crop protection group, Monsanto. It sold stakes in IBM, General Motors, Sanofi, American Airlines, and Wells Fargo.

Wells Fargo shares sold off earlier this month (losing 10% at one stage) after the US Federal Reserve banned it from increasing its balance sheet until further notice and ordered the removal of four additional directors over product miss selling scandals that saw staff opening 3.5 million bogus customer accounts while under pressure from management, and insurance policies sold to 570,000 car owners and others that they did not need. Berkshire last year sold off some of its stake when it decided not to ift its stake in the bank above 10% because it would have been captured by rules that force disclosure of financial relationships between companies and their biggest shareholders.

Berkshire did not changed its holdings of Coca-Cola, maintaining its 400 million share holding worth $US18.4 billion.

Teva is the world’s largest generic drugmaker, has previously announced plans to shed 14,000 jobs by 2019 as it seeks to lower expenses and last week forecast a sharp drop in revenues for 2018.

Teva US-listed shares were up 2% before the news, year-to-date, having tumbled more than 50% in 2017 on worries about unrealistic balance sheet values and the strength of generic drug sales. They rose 12% on the Berkshire news.

Meanwhile oil refiner, Phillips 66 said it will buy back shares worth $US3.28 billion from Berkshire Hathaway subsidiary. In an announcement before the release of the 13F filing,Phillips 66 said it will repurchase 35 million shares for $US93.725 per share. That was 3.5 cents under the close for the stock on Wednesday.

Following the buyback, Berkshire will hold 45.7 million Phillips 66 shares, out of a total of 466.5 million shares outstanding, the companies said. Berkshire’s holdings will represent a stake of 9.8%

"This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent," Buffett said in a statement.

He said Berkshire plans to continue to hold Phillips 66 stock for the long term.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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