Investor takeaways of Berkshire Hathaway's revised holdings
Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) has sold its stake in several major companies, including General Motors (GM) and Johnson & Johnson (JNJ). Berkshire Hathaway’s biggest holdings remain Apple (AAPL), Bank of America (BAC), and American Express (AXP) in recent 13F filings.
Portfolio Wealth Advisors President and CIO Lee Munson joins Yahoo Finance Live to weigh in on the possible reasons for the firm's decision to exit its positions.
Munson notes Buffett is “holding on” to investments in companies such as Bank of America due to the net profit boost a possible 2024 bond rally could bring. Munson sheds light on Buffett’s strategy which appears to be changing, insisting that “the real story is what the 13F [filing] doesn’t tell us."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video transcript
[AUDIO LOGO]
BRAD SMITH: Warren Buffett's Berkshire Hathaway has sold its stake in a handful of companies, including General Motors and Johnson & Johnson and offloading smaller positions in companies like Procter & Gamble according to its latest 13F filing. Berkshire's top three holdings remain Apple, Bank of America, and American Express. With more on what this signals about Buffett's shift in strategy, we're joined by Lee Munson, Portfolio Wealth Advisors CIO and president. What does this signal to you about perhaps the next leg of, kind of, prioritization in the Berkshire Hathaway portfolio?
LEE MUNSON: Well, I think it tells you he likes energy. Because despite the fact that he's been selling Chevron for, I think, four or five quarters in a row, he keeps adding to Occidental Petroleum. I also think it's a good lesson, not so much about what sectors he's in, right? I don't think Warren Buffett really thinks about it in that way.
But it's one thing for sure, he's holding on to his Apple. You know why? Because they're a cash flow machine.
He's holding on to his Bank of America. It's his second largest position. Why is he doing that? Why isn't he trimming that? Well, I'll tell you why, because next year, if we get the bond rally the way everybody expects, their net profit-- their net interest margins are going to go up and everybody's going to be very happy.
So I think don't necessarily read into the sectors, but just more of where he's concentrated positions and where he's focused. He is focused on energy and I think that that is a key thing going forward. I also think I want to point out that back in August of 2020, he started buying these Japanese trading companies. They're called sogo shoshas and what they do is anything that they can make a buck off of trading from here to there, commodities, software, food, TVs, they do it.
And you know, I bought a little bit with Buffett because it's a great way to follow a stock is to put five grand into it and see what happens. And my analyst was telling me last night, he's like we've made a lot of money on these stocks. It's like why didn't we just load the boat? Well, tell me about it.
But we don't get that in the 13F because 13Fs don't show US international positions. So I think the real story is what the 13F doesn't tell us and that is free cash flow moving things from one place to another. And good quality companies, you go out three to five years and you're guaranteed to make money.
So remember, it's all about those Japanese trading things. They're a good valuations. They create free cash flow. It's a classic Buffett move. That's what I think the big story is.