Warren Buffett was busy in the last three months of 2020.
OK, maybe not Redditor-trading-GameStop busy. But by the time the tape settled at the end of Q4, the chairman of Berkshire Hathaway (BRK.B) had shuffled positions in 21 different companies.
Not only did Buffett buy new stakes in two of the most recognizable stocks in the Dow Jones Industrial Average, but he also ditched a couple of other big-name blue chips and continued to bail on bank stocks.
We know what the greatest long-term investor of all time has been up to because the U.S. Securities and Exchange Commission requires all investment managers with more than $100 million in assets to file a Form 13F quarterly to disclose any changes in share ownership. These filings add an important level of transparency to the stock market and give Buffett-ologists a chance to get a bead on what he's thinking.
When Buffett starts a new stake in some company, or adds to an existing one, investors read into that as a vote of confidence. But if he pares his holdings in a stock, it can spark investors to rethink their own investments.
Here's the scorecard for what Warren Buffett was buying and selling during the fourth quarter of 2020, based on the 13F the company filed on Feb. 16, 2021, for the period ended Dec. 31, 2020. You can check out the entire list of Buffett stocks here, or continue reading here if you're most interested in Buffett's recent transactions.
And remember: Not all "Warren Buffett stocks" are actually his picks. Some smaller positions are believed to be handled by lieutenants Ted Weschler and Todd Combs.
Current price and holdings data is as of Feb. 16. Sources: Berkshire Hathaway's SEC Form 13F filed Feb. 16, 2021, for the reporting period ended Dec. 31, 2020; and WhaleWisdom.
U.S. Bancorp
- Action: Reduced stake
- Shares held: 131,137,998 (-0.6% from Q3)
- Value of stake: $6.1 million
U.S. Bancorp (USB, $44.28) is the nation's fifth-largest bank by assets and America's biggest regional bank. It's also one of the oldest Buffett stocks in the Berkshire Hathaway portfolio; the Oracle of Omaha initiated his position in the first quarter of 2006.
Buffett is notoriously tight-lipped about U.S. Bancorp, and rarely touches the position. He clipped the position by 0.6%, or a mere 823,834 shares, in Q4 2020. That follows a 0.2% trimming in Q2 2020.
Scraping just a bit off the USB stake stands in stark contrast to what Buffett has done with so many of Berkshire's other bank stocks. And it's not like USB has been such a great stock over the years. The regional lender's annualized total return lags the broader market by wide margins over the past one-, three-, five-, 10- and 15-year periods. And it lags the bank sector over the past one-, three- and five-year periods.
Still, USB shareholders no doubt appreciate Berkshire's vote of confidence. The holding company's 8.7% stake makes it the largest institutional shareholder, ahead of Vanguard (7.3%) and BlackRock (6.5%).
Apple
- Action: Reduced stake
- Shares held: 887,135,554 (-6% from Q3)
- Value of stake: $117.71 billion
Warren Buffett has said that he doesn't think of Apple (AAPL, $133.19) as a stock. Rather, Buffett thinks of it as Berkshire's third business – and considering the size of the stake, those are hardly empty words.
But even the Oracle of Omaha has to keep a star investment like Apple in check.
Buffett cut his Apple stake by 6% in Q4, possibly because it just keeps getting bigger and bigger. After all, shares in the iPhone maker rose 15% in the fourth quarter of 2020. Even after shedding 57.2 million shares, Apple still accounts for almost 44% of Berkshire's total portfolio value.
Warren Buffett took his first bite in early 2016, and the iPhone maker has since become Berkshire Hathaway's single-largest holding.
Also, at roughly 887 million shares, BRK.B remains Apple's third-largest investor. The holding company still owns 5.1% of all AAPL shares outstanding. Only Vanguard and BlackRock – giants of the passively managed index fund universe – hold more Apple stock.
General Motors
- Action: Reduced stake
- Shares held: 72,500,000 (-9% from Q3)
- Value of stake: $3.02 billion
Warren Buffett first took a stake in General Motors (GM, $53.46), the world's fourth-largest auto manufacturer by production, in early 2012. And over the past few years, he became even more bullish, upping Berkshire Hathaway's holdings in 2018, 2019 and as recently as Q3 2020.
But now Buffett appears to be tapping the brakes. Berkshire cut its holdings in the car company by 9%, or 7.5 million shares, over the last three months of 2020.
General Motors has always looked like a classic Buffett value bet. After all, there are fewer American brands more iconic than GM. He also has sung the praises of CEO Mary Barra on several occasions. And the stock perennially trades at crazy cheap multiples of expected earnings.
But GM, which had a miserable first half of 2020 that included suspending its dividend in April, rallied a remarkable 41% in Q4. Maybe Buffett just decided it was time to take a little profit.
Liberty Latin America Class C
- Action: Reduced stake
- Shares held: 1,284,020 (-10% from Q3)
- Value of stake: $14.2 million
Liberty Latin America Class A (LILA, $11.93) and Liberty Latin America Class C (LILAK, $11.62) shares are the smallest of Berkshire Hathaway's de facto bets on legendary pay-TV mogul John Malon.
Liberty Latin America provides cable, broadband, telephone and wireless services in Chile, Puerto Rico, the Caribbean and other parts of Latin America. Liberty Global, the multinational telecommunications company in which Berkshire also holds a stake, issued tracking stock of its Latin American operations in 2015, then spun off those operations entirely in 2018.
Most recently, in November 2020, Liberty Latin America closed on its nearly $2 billion purchase of AT&T's (T) wireless and wireline assets in Puerto Rico and the U.S. Virgin Islands.
While Buffett clearly finds some appeal in the expertise of Malone, a pioneer in the telecom industry, it's clear that he's not 100% comfortable with his position in Liberty Latin America, which he has tinkered with for a few quarters now.
During the third quarter, Berkshire added roughly 4% (66,567 shares) to its Class C stake, but trimmed its Class A position by about 5% (160,478 shares). However, in the fourth quarter, Buffett reversed course on the Class C shares, reducing his position by 146,177 shares, or 10%.
Suncor Energy
- Action: Reduced stake
- Shares held: 13,849,207 (-27% from Q3)
- Value of stake: $232.4 million
Warren Buffett also pulled something of a 180-degree turn on Suncor Energy (SU, $18.79), cutting deeply into his stake just a couple quarters after making a sizable addition.
Suncor – an integrated energy giant whose operations span oil sands developments, offshore oil production, biofuels and even wind energy – was the only energy stock in Berkshire Hathaway's portfolio for a couple quarters in 2020. However, Buffett added a big, blue-chip sector play during the fourth quarter (as we'll see below). That appeared to come at some cost to Suncor, which saw its stake reduced by 27%, or 5.4 million shares, in Q4.
Buffett has been somewhat fickle when it comes to the Canadian oil sands miner. When he entered SU during the fourth quarter of 2018, that marked the second time Berkshire Hathaway had taken a stab at Suncor.
Berkshire originally invested in the energy giant in 2013, then sold the entirety of the position three years later.
Wells Fargo
- Action: Reduced stake
- Shares held: 52,423,867 (-58% from Q3)
- Value of stake: $1.58 billion
Wells Fargo (WFC, $34.79), which has been in the Berkshire portfolio since 2001, was once a Warren Buffett favorite.
Now, it's in the doghouse.
The scandal-plagued mega-bank has been reeling for years in the wake of revelations that it opened millions of phony accounts, modified mortgages without authorization and charged customers for auto insurance they did not need. The business has been slow to recover, as has the stock.
Buffett has sold off Wells Fargo shares in numerous quarters since the start of 2018. It started out as what seemed to be routine paring to keep the position below a regulatory 10% maximum ownership threshold for banks.
However, Buffett dumped more than 55 million shares, or nearly 15% of his position, at the end of last year. In Q2, he jettisoned 85.6 million shares, or more than a quarter of the remaining stake. In the third quarter, he cut his position by another 46%, and Q4 saw the remainder bleed out another 58%.
Berkshire Hathaway is no longer a top-10 WFC shareholder, but its 1.3% stake in the company keeps it within the top 10.
JPMorgan Chase
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
Whatever affinity Warren Buffett had for JPMorgan Chase (JPM, $117.30) is clearly gone … and so is his stake in the nation's largest bank by assets.
Berkshire Hathaway established its position in JPM during the third quarter of 2018, then improved upon it several times thereafter. But all of that has been reversed over the past three quarters. Take a look:
- Q1 2020: Cut 1.8 million shares (3%)
- Q2 2020: Dropped 35.5 million shares (61%)
- Q3 2020: Sold off 21.2 million shares (95%)
- Q4 2020: Dumped roughly 967,000 shares to exit the stake.
That's an incredible reversal of stance for Berkshire, which was the sixth-largest shareholder in JPM as of the first quarter's end.
Part of the original attraction for JPMorgan was because of Warren Buffett's professed admiration for CEO Jamie Dimon. The two partnered with Jeff Bezos, chairman and CEO of Amazon.com (AMZN), to form a healthcare initiative intended to improve coverage and lower costs.
Coincidentally enough, that connection to Dimon has ended recently, too; their "Haven" healthcare partnership called it quits at the start of 2021.
Pfizer
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
Easy come, easy go.
Warren Buffett went gaga over blue-chip pharma stocks during the second half of 2020. During Q3, he added positions in four Big Pharma names, and he added to three of those stakes during 2020's final quarter.
Unfortunately, Pfizer (PFE, $37.33) was the odd man out.
Pfizer is best-known for blockbuster drugs such as Lipitor (for cholesterol) and Viagra (for erectile dysfunction) that long ago lost their patent protections, but it has a stocked pipeline. Investments in research and development, along with acquisitions, have resulted in several hit drugs on the market, including Ibrance, to treat breast cancer; blood thinner Eliquis; and Xeljanz, a treatment for rheumatoid arthritis.
Also, Pfizer, along with partner BioNTech (BNTX), led the way in getting a COVID-19 vaccine approved.
Despite Pfizer's pharmaceutical successes, as well as its healthy dividend stream, Buffett treated PFE like a short-term swing trade. But unless Buffett perfectly timed the top during the fourth quarter, it's unlikely he made out with gonzo profits. Buffett bought in during Q3 at an average price of $34.82 per share; the stock briefly eclipsed $43 in December before receding back into the $30s.
PNC Financial Services
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
Buffett had long been comfortable with investing in the banking business. At the 1995 Berkshire Hathaway annual meeting, he said the industry "falls within our circle of competence to evaluate."
But 2020's pain in the financial sector finally forced the Oracle to make some wholesale changes.
It's fair to say that Buffett went on a full-blown bank purge in 2020. In addition to dumping JPMorgan, he also sold off his remaining 1.9 million shares in PNC Financial Services (PNC, $126.29).
That cemented quite a reversal of fortune for PNC, which looked like it was gaining favor in the Berkshire Hathaway portfolio.
Warren Buffett began investing in PNC, the nation's sixth-largest bank by assets and second-largest regional lender, during the third quarter of 2018. Buffett upped Berkshire Hathaway's stake by another 4% in Q1 2019. And he added another 6%, or 526,930 shares, to start 2020.
But oh, how times changed. My, how times change. Buffett lopped off 3.9 million shares, or about 41%, from his PNC position in Q2, then further reduced it by almost two-thirds in Q3. By the end of 2020, Warren Buffett had severed all connections with the super-regional bank.
M&T Bank
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
M&T Bank (MTB, $126.92) was the third of the three bank stocks that Warren Buffett exited altogether during the fourth quarter, and it's perhaps the most surprising dismissal.
MTB is a regional bank that operates more than 700 branches in eight states, including New York, Maryland and New Jersey, as well as Washington, D.C. It had been profitable year in, year out, for decades, it was a reliable dividend payer, and it had been a member in good standing of Berkshire Hathaway's equity portfolio since 2001.
Buffett himself was a fan of M&T Bank's late CEO. In 2011, the Oracle recommended that Berkshire Hathaway shareholders read M&T's annual reports, which were written by Robert Wilmers, chairman and CEO from 1983 until his death in 2017.
"Bob is a very smart guy and he has a lot of good observations," Buffett said.
These qualities endeared Warren Buffett to the bank for a very long time. After all, Buffett has a soft spot for well-run, unassuming businesses. And he frequently cites the importance of management talent when it comes to deciding where to invest.
Nonetheless, MTB was merely an OK performer for Warren Buffett since he established the position two decades ago, and 2020's performance knocked it well off course. His affection for M&T, like other bank stocks, waned as the year progressed. Buffett cut his position by 15% during the second quarter, and he hacked away another 35% during Q3. That's nearly 2.5 million shares in two quarters.
The final blow came in Q4 2020, when Berkshire disposed of its remaining 2.9 million shares.
Barrick Gold
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
No one will ever accuse Warren Buffett of being a gold bug. Especially after his quick flirtation with Barrick Gold (GOLD, $25.86).
"It doesn't do anything but sit there and look at you," Buffett has been known to say about the yellow metal. But holding gold as an asset class isn't exactly the same as investing in a gold miner such as Barrick.
True, mining stocks are sensitive to the price of whatever commodity they are digging out of the ground. But at least they produce something, as in cash flow. In the case of Barrick, it even pays a small dividend.
Besides, Barrick has more going for it than gold. It also mines copper, which is used in just about everything. As such, it's a bet on a return to global growth.
It wasn't that much of a stretch, then, when Buffett picked up 20.9 million shares in Barrick during the second quarter of 2020.
But it's clear that Buffett had GOLD shares on a short leash. Berkshire curbed BRK.B's holding by more than 40% just one quarter after it initiated its stake. And in 2020's final quarter, Buffett let the remaining 12 million-share position loose.
Like with Pfizer, it's possible that Buffett made a decent short-term profit depending on when exactly he sold in Q4. But that still marks an uncharacteristically short turnaround for the famed buy-and-holder.
RH
- Action: Added to stake
- Shares held: 1,732,548 (+1% from Q3)
- Value of stake: $775.4 million
Warren Buffett has found a winner in RH (RH, $487.31), which many readers know as Restoration Hardware.
While brick-and-mortar retailers have struggled mightily over the past few years thanks in part to the rise of e-commerce, RH has found success catering to the upper crust. It also found success catering to the work-from-home movement, as Americans decided to upgrade their home offices … and their homes in general.
"With several market (high-end home growth) and company specific growth opportunities (new galleries, RH Ecosystem, int'l), we see a strong case for high (long-term) sales growth and multiple expansion," write BofA Global Research analysts, who rate the stock a Buy and call it "one of the best long-term growth stories in our coverage."
This is a young holding that started during the third quarter of 2019, but it's one that fits broadly with Buffett's worldview. Buffett stocks tend to be bets on America's growth, which is exactly what a bet on housing and housing-related industries is.
Berkshire put a little more money into its RH bet during the fourth quarter, upping the stake by 24,200 shares, or about 1%.
Bristol-Myers Squibb
- Action: Added to stake
- Shares held: 33,336,016 (+11% from Q3)
- Value of stake: $2.07 billion
Bristol-Myers Squibb (BMY, $59.40) was one of Warren Buffett's third-quarter Big Pharma bets, in which he took on almost 30 million shares worth $1.81 billion.
And he wasn't done buying. Buffett hiked the stock by another 3.4 million shares in Q4, or about 11%.
BMY beefed up in a big way a year ago when it acquired pharmaceutical giant Celgene, and that has to be a big part of the attraction to this stock. The deal brought in a pair of blockbuster multiple myeloma treatments: Pomalyst and Revlimid, the latter of which also treats mantle cell lymphoma and myelodysplastic syndromes.
That's kind of par for Bristol-Myers' course. A long track record of successful acquisitions has kept the pharma company's pipeline primed with big-name drugs over the years. Among the better-known names today are Coumadin, a blood thinner, and Glucophage, for type 2 diabetes.
Better still, this looks like a classic Buffett value.
"We continue to believe Bristol Myers shares are undervalued, and with Opdivo returning to growth following recent clinical success and several new therapies recently launched or expected to launch over the next year, we reiterate our Outperform rating," write William Blair analysts.
AbbVie
- Action: Added to stake
- Shares held: 25,533,082 (+20% from Q3)
- Value of stake: $2.74 billion
AbbVie (ABBV, $104.20) is best known for blockbuster drugs such as Humira and Imbruvica, but analysts are also optimistic about the potential for Rinvoq and Skyrizi, which treat rheumatoid arthritis and plaque psoriasis.
Indeed, recently released Q4 results were a pleasant shock for UBS analysts, who said, "We are surprised to the upside by the magnitude of beats for key growth drivers Skyrizi and Rinvoq."
But another likely draw for Warren Buffett is the biopharma firm's storied dividend history.
AbbVie is a Dividend Aristocrat, by virtue of having raised its dividend every year for nearly half a century. Even better, its current 5.0% dividend yield is one of the highest in the S&P 500, at several times better than the index average of about 1.5%. Moreover, the company has improved its payouts at a rapid 18% over the past five years.
Buffett first bought shares in Q3 2020 when he initiated a $1.86 billion stake of more than 21 million shares. He added to the position with another 4.3 million shares in the final quarter of 2020.
Merck
- Action: Added to stake
- Shares held: 28,697,435 (+28% from Q3)
- Value of stake: $2.35 billion
Warren Buffett bought another 6,294,333 shares in Dow component Merck (MRK, $80.18) in Q4, an investment initiated in the third quarter of last year. The pharma giant now accounts for almost 0.9% of BRK.B's equity holdings.
Central to Merck's fundamental performance is Keytruda, a blockbuster cancer drug approved for more than 20 indications. Additionally, MRK has a favorable patent setup with no key brands losing marketing exclusivity until 2022. Keytruda is on patent until 2028.
"While revenues missed for Q4, investors likely will/should care more about key growth drivers Keytruda, Gardasil and Lynparza, which all beat," write UBS analysts, who rate the stock a Buy despite a change in leadership. CEO Ken Frazier will retire at the end of June, with CFO Rob Davis to take over.
As for Merck's dividend, it's reliable and growing. The payout had been rising by a penny per share for years, but now it's starting to heat up. MRK upgraded its payouts by 14.6% in 2019, then followed that up with a nearly 11% improvement for 2020.
Kroger
- Action: Added to stake
- Shares held: 33,534,017 (+34% from Q3)
- Value of stake: $1.07 billion
In a sign of conviction, Berkshire increased its position in Kroger (KR, $33.66) by 34% in the fourth quarter.
Berkshire Hathaway's initial stake in supermarket titan Kroger, entered in Q4 2019, was a little bit of a head-scratcher. Many long-term investors have soured on traditional supermarket chains in a world where Walmart (WMT), Amazon.com and other large firms are vying to rule the grocery space.
But KR isn't taking the fight lying down. Believe it or not, it's one of the largest retailers in the world. Kroger has roughly 2,750 retail food stores operating under such banners as Dillons, Ralph's, Harris Teeter and its namesake brand, as well as 1,585 gas stations and even 170 jewelry stores under banners including Fred Meyer Jewelers and Littman Jewelers.
Kroger also is an excellent dividend growth stock, upping the ante in June by 12.5% to 72 cents per share quarterly. That's roughly in line with its five-year dividend growth rate of 12%.
Following the Q4 binge, Berkshire is now the fourth-largest KR shareholder at a 4.4% stake.
T-Mobile US
- Action: Added to stake
- Shares held: 5,242,000 (+117% from Q3)
- Value of stake: $707.9 million
Berkshire Hathaway more than doubled its stake in wireless communications company T-Mobile US (TMUS, $122.00) in Q4.
BRK.B first bought shares in telco in the third quarter of 2019. In the most recent period, Buffett grabbed another 2,828,844 shares, a 117% increase from the previous quarter.
T-Mobile is certainly a much more attractive investment since it closed its $26 billion merger with Sprint in April 2020. The deal created a real No. 3 wireless company whose total subscribers are at least within the same ballpark as Verizon and AT&T.
"We continue to believe that T-Mobile is the best multiyear FCF growth story in wireless with a number of levers for value creation, including subscriber growth in the core TMUS operations … (and) reducing churn in the legacy Sprint customer base," among other drivers, say Deutsche Bank analysts (Buy).
It's hardly a large position, at just 0.26% of Berkshire Hathaway's total portfolio value. But clearly Buffett and his lieutenants have warmed up to this telecom stock.
E.W. Scripps
- Action: New stake
- Shares held: 23,076,923
- Value of stake: $364.4 million
Berkshire Hathaway in September 2020 backed a $2.65 billion deal by TV station-owner E.W. Scripps' (SSP, $17.57) to purchase broadcaster ION Media.
In return for helping finance the acquisition, Berkshire made a $600 million preferred equity investment in Scripps and received a warrant to buy up to 23.1 million shares of the communications company.
Berkshire's investment, which gives it a 33% ownership stake in Scripps, accounts for a mere 0.14% of the total value of its equity portfolio.
Don't bother trying to copycat Buffett on this one. It's another case of him getting terms unavailable to mere mortals.
Marsh & McLennan
- Action: New stake
- Shares held: 4,267,825
- Value of stake: $499.3 million
Berkshire Hathaway's core operations are mostly to be found in the insurance industry, but they've never been a major factor in its equity portfolio. Indeed, the company dumped what was left in its stake of Travelers (TRV) in early 2020.
So it's something of a surprise that BRK.B initiated a position in Marsh & McLennan (MMC, $114.50) in the fourth quarter. Buffett picked up 4.2 million shares valued at not quite half a billion dollars.
The position accounts for a minuscule 0.2% of the total value of Berkshire's stock holdings. And it gives Berkshire control of only 0.8% of the insurance company's shares outstanding.
Shares in MMC, which provides various risk, strategy and consulting services, are long-time market laggards. Perhaps Buffett sees untapped value. The company also pays a modest dividend yielding 1.6% at present.
Chevron
- Action: New stake
- Shares held: 48,498,965
- Value of stake: $4.1 billion
Chevron (CVX, $93.13), the only energy stock left in the Dow Jones Industrial Average after Exxon Mobil (XOM) was removed in 2020, is another blue-chip dividend payer that's right in Warren Buffett's wheelhouse.
Berkshire Hathaway initiated a position of more than 48 million shares in the fourth quarter valued at $4.1 billion. Although energy prices aren't expected to make huge moves in the year ahead, the outlook for oil and gas is much improved and should only get better as the global economy recovers from the depths of the pandemic.
Indeed, CVX was able to take advantage of the worst of the industry's woes in July 2020 by acquiring Noble Energy in a $5 billion all-stock transaction. The company's scale, asset quality and reserves make it one of the healthiest players in an industry where a lot of players are on injured reserve.
And then there's the dividend, which is both generous in today's low-yield world and about as steady as they come. A slew of oil and gas companies were forced to slash or suspend their dividends last year, but not Chevron. Indeed, it has raised the payout for 33 straight years, and management says it will protect the dividend at all costs.
With 2.5% of CVX's shares outstanding, Berkshire becomes the energy giant's fifth-largest shareholder.
Verizon
- Action: New stake
- Shares held: 146,716,496
- Value of stake: $8.6 billion
Verizon (VZ, $54.15), the only telecommunications company in the Dow Jones Industrial Average, is a beloved staple of long-term dividend investors everywhere. That's why it looks so at home in Berkshire Hathaway's portfolio.
Berkshire and Buffett initiated a brand-new stake in VZ in Q4, picking up almost 146.7 million shares valued at $8.69 billion. In one fell swoop, the telco accounts for a sizable 3.2% of Berkshire's total equity portfolio value.
The move also makes Buffett the fourth-largest Verizon shareholder. It's 3.5% ownership stake leaves it behind only Vanguard, BlackRock and State Street Global Advisors.
Bulls like Verizon for both its growth prospects in the era of 5G networking, its defensive characteristics and the reliable income stream it delivers to investors.
"With a safe dividend yield and low leverage, we believe the market favors Verizon's 5G strategy and simpler story," say Raymond James equity research analysts. "Whether we are in an expansion or a contraction, consumers' internet and mobile plans may be the last thing they're willing to give up when times get tough."
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