Warren Buffett did a lot more selling than buying during the first quarter of 2021 – a period in which markets set record highs seemingly every other week.
The chairman and CEO of Berkshire Hathaway (BRK.B) pared back or completely exited stakes in financial and energy stocks, trimmed the company's holdings in the pharmaceutical sector, and started only one new position that, fittingly, was in the insurance industry.
Oh, and in one particularly notable about-face, the Oracle of Omaha dumped more than half of Berkshire's stake in a Dow stock he only just purchased in the fourth quarter of 2020.
Despite selling being the main theme of the quarter, Buffett did express votes of confidence in a handful of Berkshire Hathaway's other investments, shoring up stakes in the supermarket and telecommunications sectors, for example.
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 initiates a 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 first quarter of 2021, based on Berkshire Hathaway's 13F filed on May 17, 2021, for the period ended March 31, 2021. 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 May 17. Sources: Berkshire Hathaway's SEC Form 13F filed May 17, 2021, for the reporting period ended March 31, 2021; and WhaleWisdom.
U.S. Bancorp
- Action: Reduced stake
- Shares held: 129,687,084 (-1.1% from Q4 2020)
- Value of stake: $7.2 billion
U.S. Bancorp (USB, $62.21) 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. However, he clipped it by 1.1%, or 1.5 million shares, in the first quarter of 2021. That followed a trimming of 0.6%, or a mere 823,834 shares, in Q4 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. Mostly, he's taken a hatchet to them. And it's not like the regional lender's returns have justified holding on when Buffett has abandoned so many of its peers.
True, USB's total return beats the broader market's by 23 percentage points so far in 2021, but it lags considerably over the past three-, five-, 10- and 15-year periods.
Still, USB shareholders no doubt appreciate Berkshire's vote of confidence. The holding company's 8.6% stake makes it the largest institutional shareholder, ahead of Vanguard (7.3%) and BlackRock (6.2%).
Bristol Myers Squibb
- Action: Reduced stake
- Shares held: 31,032,227 (-6.9% from Q4 2020)
- Value of stake: $2.0 billion
Warren Buffett reversed course on Bristol Myers Squibb (BMY, $65.46) in Q1, cutting Berkshire Hathaway's stake by nearly 7% after bulking up over the previous two quarters.
Buffett shed 2.3 million shares in the pharmaceutical giant during the first three months of 2021. That comes after initiating a stake of almost 30 million shares worth $1.81 billion in the third quarter of 2020. He followed that up by adding another 3.4 million shares in Q4, an increase of about 11%.
BMY beefed up in a big way in late 2019 when it acquired pharmaceutical giant Celgene, and that was thought to be a big part of Buffett's attraction to the 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.
Regardless, this still looks like many classic Buffett stocks in that it's a clear value:
"The stock is attractive at these heavily discounted valuations, in our view, as we see the Celgene deal creating a faster-growing company in the long run with a less concentrated drug portfolio," writes CFRA Research analyst Sel Hardy, who rates BMY at Buy.
General Motors
- Action: Reduced stake
- Shares held: 67,000,000 (-7.6% from Q4 2020)
- Value of stake: $3.8 billion
Warren Buffett tapped the brakes on Berkshire Hathaway's holdings in General Motors (GM, $56.04) for a second consecutive quarter in Q1. He first took a stake in 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 he's clearly decided to slow down. Berkshire reduced its ownership in the car company by 7.6%, or 5.5 million shares, in the first three months of 2021. That follows a cut of 9%, or 7.5 million shares, during the final quarter 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.
With shares up nearly 150% over the past 52 weeks, maybe it was time to take a little more off the top of a profitable investment – even if analysts still like the valuation and potential for resumption of income.
"On valuation, GM shares appear favorably valued based on most standard valuation metrics," writes Argus Research analyst Bill Selesky, who rates GM at Buy. "We also expect the company to soon reinstate its dividend."
Then there's the matter of allocation. Thanks to GM's strong price performance, it now accounts for 1.4% of Berkshire Hathaway's total equity portfolio, up from 1.1% before Buffett trimmed the holding.
AbbVie
- Action: Reduced stake
- Shares held: 22,868,178 (-10.4% from Q4 2020)
- Value of stake: $2.5 billion
Buffett first bought AbbVie (ABBV, $116.89) in the third quarter of 2020 as part of a wider bet on the pharmaceutical industry. Like BMY above, he added to the holding in the fourth quarter before reversing course in Q1.
Most recently, Berkshire Hathaway cut its position by more than 10%, or 2.7 million shares. ABBV now accounts for 0.9% of Berkshire's equity portfolio, down from 1.0% at the end of Q4.
The pharma giant 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.
"AbbVie is developing new growth drivers to diversify away from Humira, still the company’s largest product by revenue," writes Argus Research analyst David Toung, who rates the stock at Buy. "These growth drivers include oncology and immunology products launched over the past five years and the portfolio of aesthetics, neuroscience and eye care products that came with the 2020 Allergan acquisition."
Another thing that puts ABBV among classic Buffett stocks 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 4.5% dividend yield is one of the highest in the S&P 500, at several times better than the index average of about 1.4%.
Sirius XM Holdings
- Action: Reduced stake
- Shares held: 43,658,800 (-12.7% from Q4 2020)
- Value of stake: $265.9 million
Berkshire has a number of bets on communications and media companies whipped up by billionaire dealmaker John Malone, one of which is Sirius XM Holdings (SIRI, $5.87).
Malone is chairman of Liberty Media, which owns a massive stake in Sirius XM. The media company reaches roughly 100 million listeners via its core satellite radio business and Pandora, which it acquired in 2018.
And as Kiplinger has noted, the investments in companies that are somehow tied to Malone's truly Byzantine corporate structure could very well be the responsibility of one of Buffett's portfolio managers. Liberty Media was a large position held by Ted Weschler's Peninsula Capital in his pre-Berkshire days.
Regardless, Berkshire's affinity for this position has been waning of late. Most recently, the holding company further reduced its stake in SIRI by nearly 13%, or 6.3 million shares.
That follows a series of sales over the course of 2020. The big hit came in Q2, when Berkshire unloaded more than 82 million shares, or 62% of its stake at the time.
As a result, SIRI has become an ever more negligible portion of Berkshire's equity portfolio. It now accounts for less than 0.10% of its stock holdings, down from 0.12% three months ago.
StoneCo
- Action: Reduced stake
- Shares held: 10,695,448 (-24.5% from Q4 2020)
- Value of stake: $654.8 million
Berkshire Hathaway slashed its holdings in Brazilian financial technology firm StoneCo (STNE, $59.41) by almost a quarter in Q1.
The company, which provides software and hardware for companies to facilitate credit- and debit-card payments, was already one of the "growthiest" Warren Buffett stocks when BRK.B entered the position in October 2018. But shares really took off amid the COVID-19 pandemic, which enhanced the fortunes of all things e-commerce.
STNE more than doubled in 2020 alone, but like so many hot-growth stocks this year, shares have taken a turn for the worse. Rising fears of interest rate hikes and a general rotation away from growth to more value-oriented names has STNE stock down almost 30% for the year-to-date.
Given the relatively small position in STNE, and the fact that it's a fintech company, you won't be surprised to learn the position was initiated by Buffett lieutenant Todd Combs – with the Oracle of Omaha's blessing, no doubt.
Although StoneCo isn't necessarily a classic Buffett stock, it nonetheless fits with Berkshire Hathaway's general bullishness on companies that facilitate and process payments.
"Payments are a huge deal worldwide," Warren Buffett said at Berkshire's 2018 shareholder meeting.
Merck
- Action: Reduced stake
- Shares held: 17,882,388 (-37.7% from Q4 2020)
- Value of stake: $1.4 billion
Has Warren Buffett had a change of heart when it comes to Merck (MRK, $79.87)?
The pharmaceutical giant is a relatively new addition to the Berkshire Hathaway portfolio and a component of the Dow Jones Industrial Average. Like ABBV and BMY, Buffett first bought MRK in the third quarter of 2020. He bought another 6,294,333 shares in the company in Q4. At that point, the pharma firm accounted for almost 0.9% of BRK.B's equity holdings.
And yet in the most recent quarter, Buffett dumped almost 38%, or 10.8 million shares, of its Merck holdings. The position now accounts for 0.5% of the BRK.B equity portfolio.
Buffett maintains long horizons, so the fact that MRK stock is essentially flat over the past 52 weeks probably means little. And the fundamentals, analysts say, remain favorable.
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.
The company is, however, undergoing a leadership transition. CEO Ken Frazier will retire in June, to be succeeded by current CFO Robert Davis. Buffett is known to place a high premium on the management team running any enterprise. Merck is also spinning off its women's health business later this year.
"We are mindful of the leadership and organizational transitions underway at the company and the impact of the Organon spinoff on Merck's growth profile," writes Argus Research analyst David Toung, who rates the stock at Buy.
Axalta Coating Systems
- Action: Reduced stake
- Shares held: 13,887,037 (-40.7% from Q4 2020)
- Value of stake: $410.8 million
Axalta Coating Systems (AXTA, $32.88), which makes industrial coatings and paints for building facades, pipelines and cars, joined the ranks of the Buffett stocks in 2015, when Berkshire Hathaway purchased 20 million shares in AXTA from private equity firm Carlyle Group (CG).
The stake made sense given that Buffett has long been a fan of the paint industry; Berkshire Hathaway bought house-paint maker Benjamin Moore in 2000.
But it appears that the Oracle is getting weary of the underperformance.
Since the end of Q2 2015, when Berkshire entered its AXTA stake, the stock has produced a 1% loss versus a 127% return for the S&P 500. And while analysts have noted that it's a perfect target to be bought out by global coatings firms, an M&A pop has never materialized.
Berkshire was Axalta's largest investor as of Q4 2020, at 10% of shares outstanding. Interestingly, despite the exodus, BRK.B still is No. 3 at a 5.9% stake, behind BlackRock and Vanguard.
Chevron
- Action: Reduced stake
- Shares held: 23,672,271 (-51.2% from Q4 2020)
- Value of stake: $2.5 billion
It's fair to say that when Berkshire Hathaway initiated a new stake in Chevron (CVX, $110.81) during the fourth quarter of 2020, a lot of people thought it could join the ranks of other classic Buffett stocks such as Coca-Cola (KO) and American Express (AXP).
After all, Chevron checks off a lot of Buffett boxes. It's a well-known American brand, and one that fit very neatly into the value camp as of late last year. It offers an outsized dividend that still yields 4.8% after a 31% gain in 2021. And the size of the stake – more than 48 million shares worth $4.1 billion at the time – immediately made it a top-10 holding in the Berkshire Hathaway equity portfolio.
But a few months later, Buffett reversed course.
Berkshire jettisoned a little more than half of the position in Q1 2020, unloading 24.8 million shares to bring the position down to 23.7 million. It's not nothing – CVX makes up 0.9% of the portfolio and is still a top-15 position. But Berkshire does drop from being the firm's fifth-biggest shareholder to No. 10.
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. And 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.
Regardless, Buffett and his lieutenants apparently felt compelled to get out of a sizable portion of the position while the gettin' was good.
Liberty Global Class A
- Action: Reduced stake
- Shares held: 3,359,831 (-81.3% from Q4 2020)
- Value of stake: $86.2 million
Liberty Global, represented via Class A (LBTYA, $28.10) and Class C (LBTYK, $28.18) shares, is another one of Berkshire's bets on communications and media companies whipped up by billionaire dealmaker John Malone.
And given the latest action in the aforementioned SIRI sale and the reduction in Liberty Global Class A shares, it appears that Berkshire is unwinding a portion of its Malone-backed bets.
Berkshire slashed its stake in LBTYA by more than 80% in the first quarter, parting with more than 14.6 million shares. The move cut LBTYA's allocation in the BRK.B portfolio to 0.03% from an already immaterial 0.16% three months ago.
Liberty Global bills itself as the world's largest international TV and broadband company, with operations in seven European countries. Berkshire's investment in the Class A shares dates to the fourth quarter of 2013. It picked up the Class C shares, which have no voting power, in the first quarter of 2014.
Berkshire now owns just 1.9% of LBTYA's shares outstanding, down from 4.5% at the end of 2020.
Wells Fargo
- Action: Reduced stake
- Shares held: 675,054 (-98.7% from Q4 2020)
- Value of stake: $26.4 million
Wells Fargo (WFC, $47.90), which has been in the Berkshire portfolio since 2001, was once among Warren Buffett's favorite stocks.
Now, it's all but gone. Buffett slashed BRK.B's remaining stake almost to the bone in Q1, leaving nothing but a rump position in the nation's third largest bank by assets.
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 2019. In Q2 2020, 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%.
Buffett really brought out the wrecking ball in Q1, in the form of a 98.7% cut to BRK.B's remaining stake. What's left of the holding company's ownership interest in the bank is worth a mere $26.4 million.
Berkshire Hathaway, once a top stockholder, now owns 0.02% of Wells Fargo's shares outstanding. This relationship is all but over.
Synchrony Financial
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
Synchrony Financial (SYF, $46.91) wasn't a particularly longtime nor large position in the Berkshire Hathaway portfolio, but it was one that jibed with Buffett's affection for credit-card companies and banks.
By the same token, it should be no surprise that SYF was ushered out as Buffett continues to hack away at his financial-sector holdings.
Synchrony, a major issuer of charge cards for retailers, was spun off of GE Capital in 2014. It's both a lender and a payments processor – like Buffett's beloved American Express – but it caters to customers who skew more toward the middle and lower end of the income scale.
Berkshire initiated a position in SYF during the second quarter of 2017, paying an estimated price per share of $30.02. Since the end of Q2 2017, the stock has delivered a total return of 75% – more than 10 percentage points shy of the S&P 500 over that same time frame. The outperformance was even worse before Q1, with the market outpacing SYF 65.9% to 28.1%, but a rebound in the sector helped Synchrony close the gap.
The exit is no small loss for Synchrony; Buffett was the firm's seventh-largest shareholder as of the end of Q4 2020.
Suncor Energy
- Action: Exited stake
- Shares held: 0
- Value of stake: $0
The ideal holding period for a Buffett stock might be forever, but the two stakes he exited in Q1 2020 had been around for shorter than five years each. The aforementioned Synchrony position was established in the first half of 2017, and Berkshire first entered Suncor Energy (SU, $24.08) in the late innings of 2018.
He's out of both now.
Suncor – an integrated energy giant whose operations span oil sands developments, offshore oil production, biofuels and even wind energy – also sells its refined fuel via a network of more than 1,500 Petro-Canada stations. And for a few months, it was the lone position in the Berkshire Hathaway portfolio.
However, when Chevron entered the fray in Q4 2020, Berkshire unloaded a healthy 27% of its SU stake. Buffett quickly finished the job during the first quarter, ditching his remaining position of nearly 14 million shares.
It's hard to blame Buffett too much. As of the end of 2020, he was still 35% underwater on his original investment thanks primarily to the COVID-sparked selloff of energy names. Though a little more patience might have paid off: SU has recovered a lot of ground since the start of 2021, with SU shares up a healthy 40% year-to-date.
Funnily enough, this was the second time Buffett quickly dabbled with Suncor. Berkshire Hathaway originally invested in the energy giant during 2013, then sold the entirety of the position three years later.
RH
- Action: Added to stake
- Shares held: 1,756,448 (+1.4% from Q4 2020)
- Value of stake: $1.0 billion
RH (RH, $633.31) continues to do big things for Berkshire.
The upscale home-goods retailer, which many readers know as Restoration Hardware, is up more than 40% year-to-date (vs. 11% for the S&P 500) amid a still-red-hot real estate market. Indeed, shares have more than quadrupled since this time last year, when many Americans started to realize that working from home was going to last more than just a few weeks, and thus began making plans to improve their new workplace environs.
Berkshire boasts Nebraska Furniture Mart among its subsidiaries, but added to its home furnishings exposure in Q3 2019 when it brought RH into the fold. RH operates 106 retail and outlet stores across the U.S. and Canada, and owns Waterworks – a high-end bath-and-kitchen retailer with 14 showrooms.
Buffett made a considerable addition (41%) to his RH stake in Q4 2019, then sat on the position for a few quarters before topping it up at the end of last year. He's added to it again to kick off 2021, albeit by a mere 23,900 shares, or a little more than 1%.
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. That success has since been amplified by the COVID pandemic and a shift in where Americans have been putting their money to work.
It's hard to tell whether this was an Oracle of Omaha buy, or a project of one of his lieutenants, Ted Weschler or Todd Combs. Buffett has been mostly mum on RH. Still, the stake 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.
Verizon Communications
- Action: Added to stake
- Shares held: 158,824,575 (+8.3% from Q4 2020)
- Value of stake: $9.2 billion
Warren Buffett is quickly warming to Verizon Communications (VZ, $57.94) – a fresh position he added a mere quarter ago.
Verizon already looked at home in the Berkshire Hathaway portfolio. While BRK.B famously doesn't pay out a dividend, Buffett is happy to collect them. And the Dow Jones Industrial Average component has paid an ample dividend, currently yielding more than 4%, for well more than a decade. Indeed, its ability to pay a healthy distribution puts it among the top dividend stocks for retirement investors.
When Berkshire initiated its stake in Verizon in Q4 2020, it bought with both hands, picking up 146.7 million shares valued at $8.62 billion. That was good for a 3.2% weight in the Berkshire Hathaway equity portfolio.
That number is a little bigger now.
In the first quarter of 2020, Warren Buffett added more than 12 million shares, improving the stake by 8%, to bring Verizon's weight in the portfolio to 3.4%. Berkshire also remains the fourth-largest owner of VZ shares at 3.8%, behind institutional investors Vanguard (7.8%), BlackRock (7.4%) and State Street Global Advisors (3.9%).
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."
Marsh McLennan
- Action: Added to stake
- Shares held: 5,287,526 (+23.9% from Q4 2020)
- Value of stake: $644.0 million
Marsh McLennan (MMC, $134.49) is another new Buffett position that he apparently couldn't get enough of. And in this case, Berkshire was much more aggressive about its second bite.
Berkshire has plenty of insurance exposure in its core operations, including Geico, General Re, MLMIC Insurance and Berkshire Hathaway Specialty Insurance, among others. But up until recently, they've never been a major factor in its equity portfolio. In fact, Buffett dumped what little of his Travelers (TRV) stake remained in early 2020.
But that wind has changed direction over the past couple quarters, via both his MMC addition and Berkshire's lone new stake in Q1 2021, which we'll get to momentarily.
As for Marsh McLennan: Berkshire initiated a 4.2 million-share position worth just short of half a billion dollars during Q4 2020. It wasn't a major position, at just 0.2% of the total value of Berkshire's equity holdings – and it still isn't. But by virtue of another 1 million shares or so purchased in Q1 2021, the stake has increased by 23% in just a few short months.
Shares in MMC, which provides various risk, strategy and consulting services, are longtime market laggards. But to Buffett's credit, they've outperformed so far in 2021, up nearly 15% for the year to date. The company also pays a modest dividend yielding 1.4% at current prices.
Kroger
- Action: Added to stake
- Shares held: 51,060,296 (+52.3% from Q4 2020)
- Value of stake: $1.8 billion
The biggest addition among existing Buffett stocks during 2021's first quarter was Kroger (KR, $37.39) – the massive supermarket chain that treated shareholders well during the worst of the pandemic.
Kroger operates roughly 2,750 retail food stores operating under such banners as Dillons, Ralphs, 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.
Berkshire Hathaway turned a few heads during the fourth quarter of 2019, when it initiated its 18.9 million-share position in Kroger. But given what was to come, it now looks like a savvy pick. From peak to trough, the S&P 500 lost about 34% during the COVID bear market; KR shares appreciated by 5% during that time period.
Of course, as investors' focus started to shift away from essential retailers to opening plays, Kroger has underperformed. It's up just 21% since the market bottom versus an 86% recovery for the broader market.
Buffett is nonetheless extremely interested in owning more KR.
Buffett added 8.6 million shares, or 34% to his Kroger position in Q4 2020. And he has followed that up with another 17.5 million shares, or 52%, through the first three months of 2021. Berkshire Hathaway is now the third-largest owner of Kroger shares, with its 6.7% behind only BlackRock (9.8%) and Vanguard (9.7%).
It's only a middle-of-the-pack position at just 0.7% of Berkshire's equity assets. But it certainly belongs. Unlike other recent new positions such as Amazon.com (AMZN), StoneCo, Biogen (BIIB) and Snowflake (SNOW), old-economy value play Kroger is right in line with Buffett's traditional interests.
Aon
- Action: New stake
- Shares held: 4,096,146
- Value of stake: $942,564,000
As we mentioned previously, Buffett likes the insurance business – he just hasn't been too keen on owning them. But in Q1, the industry accounts for two of his five buys, and his lone new position.
London-based Aon (AON, $255.20) offers a wide range of professional services, from insurance and reinsurance to pension administration and financial advising to health insurance.
Like most insurance firms, you won't necessarily expect profits to grow in a perfectly straight line year after year. But revenues have improved without interruption over the past four years, and net income is up in three of the past five years.
That operational strength has led to superior returns against both the market and its peers. AON shares have provided a total return (price plus dividends) of 434% over the past decade, versus 285% for the S&P 500 and 226% for the SPDR S&P 500 Insurance ETF (KIE).
Berkshire hasn't exactly bet the farm on Aon. The roughly 4 million-share position is worth less than $1 billion, making it just 0.35% of equity assets. Nonetheless, it's one of the few aggressively bullish moves that Buffett & Co. made amid another quarterly torrent of sales.
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