Warren Buffett's Latest Stock Market Moves! (Berkshire Hathaway Portfolio Update)

Well, it's that time again. We've waited patiently for 45 days after the end of Q3, and thus Warren Buffett has released Berkshire Hathaway's 13F filing. So, in this video, we're going to be doing a deep dive into exactly what Warren Buffett has been buying and selling in Q3, including a huge $7.6 billion investment that no one's really talking about. So, with that said, let's get started.

Also, before we get started, Movember update: we're now over halfway through Movember, and Team Margin of Safety has so far raised $2,800, which I think is awesome. Of course, all proceeds go towards men's mental health, suicide prevention and research, and other various initiatives to combat prostate and testicular cancer. So, if you're interested in helping us raise some money, please check out the link down in the description below, and thanks to Daniel Graham, KB, and Nick for the donations since my last update—very much appreciated.

Alright, so what's Warren Buffett been up to this quarter? Well, let's have a look, starting with, of course, his cash position. Berkshire Hathaway is now up to $149 billion of either cash or short-term U.S. treasuries—$149 billion. Compare this to Berkshire's stock portfolio: now $310 billion, and he's sitting in about 32% cash.

Although, having said that, remember as well that Buffett has said that $30 billion of that cash pile is absolutely untouchable as Berkshire's emergency fund, and another chunk on top of that is tucked away as further protection for the insurance business. But nonetheless, it's a lot of cash, and this shows that, you know, Warren Buffett isn't really finding much to buy right now. You know, a lot of people might see this high percentage of cash and think, you know, maybe he's trying to potentially prepare for some sort of upcoming market crash. But remember, that's not really how Buffett goes about his investing at all. Him accumulating cash is just a function of his investment strategy.

Remember, a core pillar of his investment approach is waiting for a margin of safety, buying great businesses at discounted prices, and if he can't find those opportunities, he isn't going to blow money on crappy investment opportunities. He's just going to accumulate cash for a while. So that's really what we're seeing right now.

But enough talk about cash, let's talk about his U.S. share portfolio. Of course, this gets revealed to us in the 13F filing, which is the document that came out just the other day. And well, here it is—this is the beautifully summarized 13F update by Data Roma for Berkshire Hathaway in Q3. I have to say, there's not really that much going on, and while this sucks from an investing YouTuber perspective, it does align perfectly with the idea that Buffett, you know, is struggling to find businesses to buy right now, and it's consistent with the fact that he has continued to accumulate cash.

So, as you can see, there was really just one small change within the top ten holdings: a 2% reduction in U.S. Bancorp. The rest—totally unchanged. And yes, there were some more drastic changes further down the list, but if you want to really get a sense for what Warren Buffett is doing with his portfolio, really just look at the top 10 stocks.

I mean, firstly, the top 10 stocks account for 88% of Berkshire's total U.S. portfolio, but secondly, the further you go down the list, as the positions get smaller and smaller, the less likely it is that Warren Buffett actually made that investment himself. Because, of course, Ted and Todd also make investments for Berkshire Hathaway, which shows up in Berkshire's 13F, but they have much less cash than Warren to play around with. So, a lot of these positions that take up, say, 0.13% of the total portfolio are much more likely to be them.

So, if you want to know what Warren Buffett is doing, really just look to the top 10, 15 kind of holdings. But no doubt, as we go down the list, like a lot of these investments were still made by Warren Buffett himself. So, let's have a look at what else happened in Q3.

So, they reduced 19% in Charter Communications, which is a telecommunications company that owns Spectrum, which serves 31 million customers in the U.S. They added 24% to Chevron, which is, of course, an oil giant. They reduced 4% in Visa and 6% in Mastercard—both huge moat companies that form the oligopoly in payment processing. They continued to cut in the pharmaceuticals, reducing 30% in AbbVie, 16% in Bristol Myers Squibb, and selling out completely of Merck and Organon. They also reduced 35% in Marsh and McLennan, which is an insurance company.

Then from there, there were also two new buyers for the quarter: Floor and Decor Holdings, a company that, you guessed it, sells floor and decor products, and there's also Royalty Pharma, which is a pharmaceutical company. Now, normally I would get super excited about new buyers from Warren Buffett, but in this case, you know, it's likely that it wasn't even Warren that bought them. Because again, just look at the percentages—0.16%, 0.03% of the portfolio. So, yeah, unfortunately, nothing to really sink our teeth into this quarter, or is there?

Well, you won't find it on the 13F, but Berkshire Hathaway did actually make a $7.6 billion investment during Q3. And as you might have already guessed, it was in themselves. As you guys know, over the past few years, really since the start of 2020, Buffett has been buying back a lot of Berkshire Hathaway stock. And for those that don't know, the reason a company buys back their own stock is essentially to clear shares off the table.

Then, as the company clears more and more shares, this increases the percentage ownership for their long-term shareholders. So someone might go from owning 1% of Berkshire to 1.5% without actually spending a dime of their own money to buy more stock. Their ownership just increases because Warren Buffett was out there reducing the total share count, making each share reflect a slightly higher percentage of the ownership of the business.

And if you dive into the most recent quarterly report, you'll find a section all about share repurchase, and it shows that in total, they bought back about $7.6 billion worth of stock in Q3, taking the total amount of share repurchases in 2021 to $20.2 billion. And throughout this year, most of that buying has happened in January, June, and September, which makes total sense.

So, it's a big investment for sure, and it returns a lot of capital to shareholders, but it also gives us a very interesting piece of information, because it tells us the price at which Buffett believes Berkshire's stock price is undervalued. And that's because, in the annual report, Berkshire says Berkshire's share repurchase program permits Berkshire to repurchase its Class A and Class B shares at any time that Warren Buffett or Charlie Munger believe that the repurchase price is below Berkshire's intrinsic value, conservatively determined.

Essentially, if the share price is too high, they won't buy back stock; if it's too low, then they definitely will buy back stock. And with Buffett buying back stock more in September than in July and August, we can see that at this point in time, he feels Berkshire is undervalued around the $410,000 range.

And this is very different from other companies. For example, many companies that are just out there gushing cash with no effective use for it, they will just commit—they'll commit to repurchasing a certain amount of stock each quarter, really whatever the price is. But even though investors grin and vote, you know, "Yes, please do that," it's actually a really silly way of going about share buybacks. Because what if your stock is horrifically overvalued? Then you're just paying way too much for the shares that you're buying, and even though it still clears the shares off the table, you're burning money in the process.

It's like going out and buying all of your friends an Xbox for Christmas but paying two thousand dollars a pop. You know, they'll still like the gift, but at the same time, it's a big waste of money. But Buffett and Munger, thank goodness, have never subscribed to this kind of behavior. Yes, they'll do buybacks, but only when they can buy back their own stock at a discount to its intrinsic value.

Then they get to clear a lot of shares off the table for the same amount of money, and it really does provide value to the existing shareholders. So overall, guys, that is Warren Buffett's Q3 for 2021. You know, everything we see is very consistent. His cash pile is growing because he isn't finding much—he isn't finding much to sink his money into, hence no big buys in Q3. But he thinks Berkshire itself is fairly priced, so he's just buying that instead.

So hopefully you still enjoyed the video. Unfortunately, not that much material to work with this quarter in terms of the actual 13F. But if you did enjoy the update, please consider leaving a like, subscribe to the channel if you haven't done so already. If you're new around here, I would really appreciate it. And you know, if you're interested in learning how Warren Buffett goes about his investing approach, you just want an eight-hour course that just steps you through every single step of the process, then consider checking out "Introduction to Stock Analysis." That's a course that I've made—it's, yeah, eight hours long, completely in depth. You can find it over on Profitful, which is the website that I started up.

So, if you're interested in that, links down in the description below. New Money Clips link down in the description as well for short-form New Money content. But guys, apart from that, that'll just about do me. I'll see you guys in the next video.