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Berkshire Hathaway's Q1 Portfolio Moves: Is Boring Okay?

  • (0:30) - Breaking Down Berkshire Hathaway’s Portfolio

  • (3:00) - Warren Buffett's Current Buy and Sells

  • (18:00) - Episode Roundup: RH, WSM, TJX, COF, MA, V, BAC

  • Podcast@Zacks.com

 

Welcome to Episode #328 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

The quarterly 13-F filings are out. Remember, the 13-Fs are released 45 days after the end of the quarter. They provide the stock purchases, and sales, of the big portfolio managers.

Many managers toil away in relative obscurity, known only by their own investors. But that is not the case with the most famous value manager, Berkshire Hathaway’s Warren Buffett.

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This quarter’s 13-F was released on May 15, after the market closed. Tracey went on Whale Wisdom, one of the popular 13-F websites, to see Berkshire’s filing, and it was so busy she couldn’t get on the page. It gave her an error message about too many users.

But is it all this hype over nothing?

One New Buy

It turns out, Berkshire didn’t do much with its money in Q1 in terms of buying equities. It still has $130 billion sitting there, ready to be deployed.

1.       Capital One Financial (COF)

Buffett added a new $1 billion position in Capital One Financial in Q1. It’s a financial company that is well known for its credit card business, but also offers auto loans, and personal and commercial banking. This is a small position for the overall portfolio.

Shares of Capital One Financial are up 6.7% year-to-date but are down 13.3% over the last year. It’s cheap, with a forward P/E of 7.8.

Capital One Financial pays a dividend, currently yielding 2.5%.

Did you know that Berkshire already owns two other major credit card companies?

2.       Visa Corporation (V)

How many know that Berkshire owns Visa? It first bought shares in the third quarter of 2011. That was good timing.

Shares of Visa are up 963% since Aug 31, 2011. But the Visa position is still very small in the Berkshire portfolio. It’s just 0.58%.

Why hasn’t Berkshire bought more over the years? Maybe valuation played a factor. Visa trades at 27x earnings.

3.       Mastercard Inc. (MA)

Did you know that Berkshire owns Mastercard as well? Berkshire bought it first, in the first quarter of 2011. It must have liked what it saw, and then bought Visa two quarters later.

Mastercard is just 0.45% of the portfolio. That’s a very small position which won’t move the needle much, if at all.

It’s too bad it’s so small because shares of Mastercard are up 1,479% since Feb 28, 2011. It’s been a great performer.

Mastercard is even more expensive, on a P/E basis, than Visa. It’s trading at 31x. Valuation could also be the reason Buffett doesn’t add to the Mastercard position.

A Surprising Sale in Q1

There were several trims of various positions in Q1, including selling some of the Amazon position, but there was also one surprise sale: RH. It didn’t just trim it. It sold ALL of it.

Berkshire Hathaway already owns several furniture companies. Did they just not want to own another?

It was a small position in the portfolio, just 0.2%, so the shareholders won’t even notice. But it was still a surprise.

4.       RH (RH)

RH is a luxury lifestyle brand that sells furniture, offers interior design services and has hospitality offerings in hotels and restaurants. Berkshire first bought shares in the third quarter of 2019. It stayed committed throughout the pandemic, even on the initial stock panic.

But shares of RH are down 56% the last 2 years. RH’s earnings are expected to fall 43% this year.

RH also isn’t cheap. It trading with a forward P/E of 21.

It will report earnings again on May 25, 2023.

5.       Williams-Sonoma, Inc. (WSM)

No, Berkshire doesn’t own Williams-Sonoma, but maybe it should. It owns the top retail furniture brand in West Elm. It’s stock has also had a rough 2 years, falling 28%.

But Williams-Sonoma is now cheap, with a forward P/E of 8.3. It’s earnings are also expected to fall, but only 18.8% from last year.

Williams-Sonoma also pays a dividend, currently yielding 3.1%.

What Else do Value Investors Need to Know About What Berkshire Is Buying and Selling?

Listen to this week’s podcast to find out.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Mastercard Incorporated (MA) : Free Stock Analysis Report

Visa Inc. (V) : Free Stock Analysis Report

Capital One Financial Corporation (COF) : Free Stock Analysis Report

Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report

RH (RH) : Free Stock Analysis Report

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Zacks Investment Research