Warren Buffet is reportedly making a stock purchase, which has created hype in the market, a clinical professor of finance makes a guess.
Berkshire Hathaway’s Q4 earnings show a $2.376 billion increase in their investments in the banking, insurance, and finance sectors, up from $1.213 billion in Q3.
Berkshire’s investment portfolio
Berkshire’s investment portfolio remains top-heavy, with five companies dominating the scene in 2023. These big five represented about 79% of their total investment value, slightly up from 75% in the previous year.
Apple, considered Buffett’s prized asset, recorded a significant valuation boost, climbing $55.3 billion, reaching $174.3 billion by year-end, despite its stock taking a more than 5% hit early on. Berkshire’s stake value in Chevron dropped by 37% to $18.8 billion. Meanwhile, American Express and Bank of America investments grew, but Coca-Cola’s stake dwindled.
David Kass Makes a Guess
David Kass, a clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, stated that Berkshire revealed in its 13F that it added about $2 billion or 14% to its stake in Chevron.
Kass recommended Chevron as a conservative investment, yielding a 4% cash dividend and a large stock buyback program. Kass further noted that Berkshire significantly increased its weighting in financial services stock, which could indicate a view that interest rates have hit their highs for this cycle and that the Federal Reserve will lower rates sooner rather than later, according to Earle.
Kass’s guess for the ‘mystery stock’ in Berkshire’s portfolio is JPMorgan Chase. Berkshire’s 10Q filing for the third quarter of 2023 was subject to an argument that pointed out an unspecified purchase of $1.2 billion of stocks related to “banks, insurance, and finance.” Kass further stated that Berkshire’s investment officer, Todd Combs, has been on JPMorgan’s board of directors since 2016. JPM is generally acknowledged as the best-managed and most profitable bank.
Kass added, “A 5% stake in JPM would currently equal $26 billion, which would ‘move the needle’ for Berkshire and qualify as an ‘elephant’ that Buffett has been seeking.”
A Look at 2023 for Berkshire Hathaway
2023 was a milestone year for Berkshire, with its stock price surging and almost touching the $1 trillion market cap, putting it in the league of tech giants like Amazon and Apple.
Buffett’s annual letter highlights a rise in operating earnings, but he remains cautious about repeat performances. He emphasizes a steady growth strategy and minimal risk, with a restrained outlook on global acquisitions and investments. However, Berkshire diversified its portfolio by increasing stakes in five Japanese companies in 2023. Buffett hinted at these investments paving the way for potential global collaborations, although he acknowledged the slow and steady approach required due to Berkshire’s massive scale.
Summary
According to the news, Berkshire’s investment portfolio is top-heavy, and Warren Buffet is about to make a purchase. Although there were hints of potential global collaborations, Buffett emphasized a cautious approach due to Berkshire’s massive scale and focused on steady growth and minimal risk.
