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Warren Buffett Just Invested $4.1 BILLION in a New Stock!


8m read
·Nov 7, 2024

Well, here we go again, everyone. We've waited patiently, and now we finally get an updated peek into the portfolios of the world's best investors. The 13F filings are live, everybody! And for those that don't know what a 13F is, I feel like we've been here before. JJ, rewind to last quarter.

Well, as of the time of recording, we've now ticked 45 days past the end of Q3, and that means the first NF filings were out. So these are regulatory filings that portfolio managers with at least 100 million in assets under management must submit to the SEC every quarter. What it does is disclose their equity portfolio, so AKA their stock picks become public knowledge. Obviously, this is an incredible bonus for us everyday investors because we get to see what the smart money is buying and selling.

So, today, starting off 13F season, we're going to look at the smartest of the smart money—Mr. Warren Buffett, the Oracle of Omaha. Literally, the best investor the world has ever seen. So let's discuss everything Warren Buffett has been buying and selling in Q3 2022 and, thus, what he's thinking about the markets right now.

Okay, back to present day, Brandon, for the rest of the video. So, Berkshire Hathaway, where do we start? Well, I always like to start by looking at the cash pile to get a sense of how heavily invested Buffett is at the present time. This is the chart part of Berkshire Hathaway's cash position, including their short-term treasuries. Over time, as you can see, in Q2, there wasn't a lot of activity, and they ended the quarter with 101 billion in cash.

Now, at the end of Q3, they've finished up with 105 billion in cash. So again, fairly inactive. And what does that tell us about how heavily invested Buffett is right now? Well, last quarter, Berkshire's portfolio was worth 300.1 billion, which meant they were pretty much exactly one quarter cash and three-quarters invested. Now, in Q3, with the slight increase of the cash pile and a slight reduction to the portfolio, Berkshire is keeping just over 26 percent of cash on the sidelines.

Although, having said that, do remember that also includes an untouchable 30 billion emergency fund for their insurance business. So still definitely room for big investments if Buffett wants, but it seems as though he didn't find anything crazy in Q3.

With that said, let's now look inside the 13F filing of Berkshire Hathaway. So this is predominantly the stock portfolio of Warren Buffett, of course, but do remember that Todd Combs and Ted Weschler also make investments under the Berkshire Hathaway name. Thus, not everything in here is always Buffett.

When you're looking further down the list of the smaller holdings, the probability that it's actually Todd increases substantially. Also remember that this is just the US portfolio; the 13F filing is a US regulatory filing. However, for Buffett, the vast majority of his portfolio sits in the United States anyway. With that said, here is everything that Berkshire Hathaway bought and sold in Q3 2022, from the top down:

They added to Chevron, they added a lot to Occidental, they reduced in Activision Blizzard, they bought into Taiwan Semiconductor—very interesting. They reduced US Bank Corp fairly significantly, they trimmed Bank of New York Mellon, trimmed Kroger, added to Paramount Global, reduced GM, added to Celanese and IH, and finally, they bought into Louisiana Pacific Corp and Jeffrey's Financial Group.

I will say, if you're interested in looking into the valuation, the past performance, the future expectations, and the financial health of any of these major buyers from Buffett this quarter, definitely check out my Discover collection I just released in collaboration with Simply Wall Street, which is linked down in the description and the pinned comment.

Quick reminder: you can try Simply Wall Street for free, or if you're keen to sign up for the premium subscription that I use, you can actually get 40% off through that link down below. Anyway, those were Berkshire's buys and reductions, and on top of that, they also sold out of one position, that being Store Capital.

So here is the chart of all the activity for the quarter if you did want to pause here and kind of take time to absorb all of that information. However, with all that information out there, what are the biggest takeaways from this quarter's changes that you should know about? Well, as I say, if we're talking about Buffett himself, we have to hone in on the top 10 to 15 holdings. After that, the changes get much less relevant, and the further you go down, the more likely the movement is either Ted or Todd.

So, honing into those top 15 holdings, I think we find two main things to discuss. I'll start with a big surprise, and that was the big new position in Taiwan Semiconductor (TSMC), immediately up to the 10th largest position in the portfolios. So in one quarter, Buffett has bought about four billion dollars' worth of this business or about 60 million ADRs. This news incidentally caused the stock price of TSMC to rise 7.9%.

So the Buffett effect is definitely in full swing there. But what does this buy actually mean? Well, it means that, first of all, Buffett is making a large bet on semiconductor manufacturing, and it also means he isn't afraid to invest in big businesses based in Taiwan.

So firstly, what even is TSMC? Well, TSMC is a dominant player in semiconductor manufacturing. In fact, current estimates are that they hold around 56 percent of the global foundry revenue, according to Trend Force. They're the ones that get the big contracts with huge companies like Apple, AMD, Intel, Qualcomm, Sony, and Nvidia, and then they actually go and manufacture what these businesses need.

So what's Buffett's thesis here? Well, my best guess is that this is a long-term bet that semiconductor manufacturing will rise over the long run and businesses will thus get more profitable, and Buffett is simply taking advantage of short-term uncertainty to get in. Because right now, there is a lot of moving and shaking, as big-name brands reduce their orders and semiconductor businesses slash their profit forecasts, which is leading to increased volatility in stock prices.

So, I think this is Warren Buffett essentially saying brands and products may come and go, but over time, semiconductors will be more and more in demand, and he wants to get in on that trend at a reasonable price. Thus, he buys the biggest semiconductor manufacturer in TSMC. It's kind of like investing not in the pizza joint but in the company that makes the pizza boxes. You know, over time, pizza joints may come and go, but people will still eat pizza, and every pizza needs a box.

But from there, one of the questions I had was why is Buffett putting money in Taiwanese businesses? The more I thought about it, I think the answer is actually pretty straightforward in this case. Yes, there may be a lot of geopolitical tension between China and Taiwan right now, but I don't think in any scenario TSMC gets heavily impaired.

The reason is, you know, with the US looking to invest heavily in homegrown chips to become the dominant worldwide player in the space, all of a sudden, TSMC becomes a very important partner to China for them to be able to keep up. So even if things got really ugly with China and Taiwan, I think either way TSMC will still thrive. They are a very important player in the electronics industry, so that is definitely the first big takeaway from Buffett's 13F.

Then from there, the second big noticeable news is that, you know, Buffett continues to buy these big oil companies. Last quarter, he added 1.4 to his Chevron position and 16 to his Occidental position, and now in Q3, he continued to buy more, adding 2.4 to Chevron and a massive 22.58 to its Oxy position.

Interestingly, this is now the fifth quarter in a row he’s added to Chevron and the third quarter in a row that he’s bought Oxy. In the case of Oxy, he now holds more than 20% of the company, and this is despite shares in both companies continuing to appreciate through the quarter. So, Buffett is happy to buy more oil stocks, and I don't think his reasoning has changed at all since we spoke about this in the last Buffett portfolio update video that I made, literally three months ago.

Now, in that video, I read out two historical quotes from Warren Buffett about oil stocks, and I'll read them to you again. Firstly, he said, "When you buy into a huge oil production company, how it works out is going to depend on the price of oil to a great extent. It's not going to be geological home runs or super mistakes or anything like that. It is an investment that depends on the price of oil."

So yes, the price of oil is the major barometer for these stocks, but he also said in 2007, quote, "If we were in an oil stock, it's because we think it offers a lot of value at this price, but it does not mean we think the price of oil is going up. If we thought oil was going up, we could always just buy oil futures, which we actually did once."

So, Buffett's reasoning for buying oil stocks is basically that they're good quality businesses at fair prices, and he's not just making bets on oil prices. This is actually very well aligned with what he's said recently about Oxy, for example, regarding the transcript of the Q1 Oxy earnings call. Buffett said, quote, "I read every word and said this is exactly what I would be doing. She's running the company the right way," referring to their CEO, Vicki Hollub.

In the case of both Chevron and Oxy, both have strong plans to increase shareholder returns through dividends and stock buybacks, and if Buffett can get in at a fair price, I think that sounds better to him than just keeping that money in cash. So, I honestly just think Buffett sees healthy returns in high-quality businesses going forward.

That's a deal that he's happy to do, although, as the share prices of these businesses rise, it will be interesting to see at what point Buffett actually becomes no longer interested in adding more. But overall, guys, those are the two main takeaways from the Berkshire Hathaway Q3 13F.

Definitely let me know what you think down in the comments section below. A big thanks again to Simply Wall Street for sponsoring, and again check out that Discovery collection linked below if you'd like to check out some of these stocks for yourself and do some analysis. But with that said, guys, thank you very much for watching!

Definitely leave a like on the video if you did enjoy it. Subscribe to the channel if you'd like to see more. 13F season's just kicking off, baby! So definitely stay tuned for more. But with that said, guys, thanks for watching, and I'll see you all in the next video.

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