Berkshire Hathaway's Latest Portfolio Moves: A Strategic Shuffle

Key Points

• Berkshire Hathaway initiated new positions in Heico Corporation and Ulta Beauty, signaling a strategic entry into the aerospace and beauty retail sectors.
• Buffett significantly increased Berkshire's stake in Sirius XM by almost 260% and modestly boosted its holdings in Occidental Petroleum, reinforcing his confidence in these sectors.
•  Berkshire notably cut its stake in Apple by nearly half and reduced its positions in Capital One and T-Mobile, reflecting a more cautious approach toward these companies and industries.

As always, Warren Buffett's investment decisions are under the spotlight, with every move dissected by investors eager to follow in the footsteps of the legendary "Oracle of Omaha." The most recent 13F filing for the second quarter of 2024 offers a fresh look at Berkshire Hathaway's NYSE: BRK.B evolving portfolio, revealing strategic shifts, sector diversification, and a few surprises.

New Additions: Expanding Horizons

Buffett initiated positions in two companies in a notable shift that marked Berkshire's entry into new sectors. Heico Corporation NYSE: HEI, a manufacturer of aerospace and defense components, caught Buffett's eye, with Berkshire acquiring over 1 million shares valued at more than $185 million. This move underscores a calculated interest in the aerospace sector, likely driven by its long-term growth potential.

Another intriguing addition is Ulta Beauty NASDAQ: ULTA, where Berkshire opened a position with 690,000 shares worth around $266 million. Although modest by Buffett's standards, this investment signals confidence in the beauty retail industry's resilience and growth prospects.

Doubling Down: Strengthening Core Bets

Buffett's strategy often involves building upon existing positions, and this quarter was no exception. One of the most aggressive moves was in Sirius XM Holdings NASDAQ: SIRI, where Berkshire increased its stake by a staggering 260%, bringing its total holding to nearly 133 million shares valued at $376 million. This substantial increase reflects a firm conviction in the future of satellite radio.

Berkshire also modestly boosted its stake in Occidental Petroleum NYSE: OXY in the energy sector, adding nearly 3% more shares. With over 255 million shares worth $16.1 billion at the end of June, this position remains one of Berkshire's most prominent in the energy space.

Steady Holdings: Betting on the Long-Term

True to his philosophy of long-term value investing, Buffett kept many of his core holdings unchanged. Companies like Bank of America NYSE: BAC, Coca-Cola NYSE: KO, American Express NYSE: AXP, and Kraft Heinz NYSE: KHC remain stalwarts in Berkshire's portfolio, reflecting Buffett's unwavering confidence in these businesses' ability to deliver consistent returns over time.

Significant Reductions: Reevaluating Tech and Financials

One of the most notable moves this quarter was a significant reduction in Berkshire's stake in Apple Inc. NASDAQ: AAPL. Buffett cut his position by nearly half, reducing it to 400 million shares. This move suggests a more cautious stance on the tech giant, even as it remains Berkshire's most significant single holding at over $84 billion.

In the financial sector, Berkshire also trimmed its positions in Capital One Financial NYSE: COF and T-Mobile US NASDAQ: TMUS, reducing its stakes by 21% and 11%, respectively. These adjustments indicate a reevaluation of growth prospects within these industries.

Complete Exits: Saying Goodbye

Buffett's strategy isn't just about holding or buying more but also knowing when to exit. This quarter, Berkshire fully divested from Paramount Global NASDAQ: PARA and Snowflake Inc. NYSE: SNOW. The exit from Paramount was expected after Buffett acknowledged the investment as a rare misstep. At the same time, the sell-off of Snowflake shares suggests a reassessment of the company's future growth potential.

Top Holdings: A Concentrated Approach

Berkshire's portfolio remains heavily concentrated, with the top five holdings—Apple, Bank of America, American Express, Coca-Cola, and Chevron—accounting for about 73% of its total value. This concentrated approach reflects Buffett's belief in focusing on a few high-conviction bets rather than spreading investments too thin.

Final Thoughts: A Strategic Shuffle

Buffett's latest moves offer insight into his current market outlook. The cautious trimming of tech stocks, selective additions in aerospace and retail, and continued confidence in energy and core financial holdings reflect a balanced approach to navigating the current economic landscape. As always, Buffett's actions serve as a valuable barometer for investors, providing a window into where one of the greatest investors ever sees opportunity and risk.