After the US stock market closed on Wednesday (May 15th), Berkshire Hathaway, a subsidiary of Warren Buffett, released its 2024 Q1 end of position report (13F report), which unraveled a mystery that its followers had always been interested in.
In this position report, in addition to reducing its holdings of 116 million Apple stocks and clearing HP stocks, another major highlight is the emergence of a "new face" in Berkshire's heavy holdings in the first quarter - Chubb Insurance. This individual stock alone has a market value of $6.7 billion and has become Berkshire's ninth largest heavy holdings.
After the announcement, Anda Insurance's stock rose by over 7% in post market trading.
Mysterious Stocks
In fact, since the second half of 2023, Berkshire has been increasing its stake in Anda Insurance, but it has never been reported before. Because the Securities and Exchange Commission (SEC) allows Berkshire to keep this matter confidential.
However, many investors still see signs of this, as separate quarterly documents show that Berkshire's equity in banks, insurance, and financial companies increased by $3.59 billion in the second half of last year, followed by an increase of $1.4 billion in the first quarter, and the company is also selling stocks in other industries, including consumer goods. Therefore, many people speculate that Berkshire's secret holdings may be in a bank stock.
At the Berkshire annual meeting held in Omaha earlier this month, the topic of this secret holding did not arise. It was not until this Wednesday that Berkshire officially disclosed this position to the public in its latest position report.
According to media reports, Buffett's company initially purchased 8.1 million shares of Anda stock worth $1.7 billion at the end of September last year; Then increase the position to 20.1 million shares in December, worth 4.5 billion US dollars; As of the end of March this year, the company has raised its bet to 25.92 million shares, valued at $6.7 billion.
This requirement for shareholding confidentiality is relatively rare in Berkshire. The last time the company kept its holdings confidential was when it made significant investments in energy company Chevron and telecommunications company Verizon in 2020.
Buy on dips
Anda Insurance is listed on the New York Stock Exchange and is one of the world's largest listed property and casualty insurance companies by market value. It is also one of the largest commercial insurance companies in the United States, led by Evan Greenberg, son of former CEO of insurance giant American International Group (AIG).
In 2016, Evan Greenberg created Anda Insurance through the merger of Ace Ltd. and Chubb Corp. The merged Anda Insurance became a large insurance company covering a range of accident insurance, including cyber attack insurance and ocean freight insurance, with operations in 54 countries worldwide.
Anda Insurance has frequently appeared in the audience's view recently because it is the insurance company for the "Francis Scott Key" bridge that collapsed in a Baltimore ship collision accident.
According to reports, Anda Insurance will pay $350 million in compensation to Maryland, which is the upper limit of the bridge's insured amount.
In recent years, Buffett has been striving to find assets worth acquiring, and there may be several reasons why he likes Anda Insurance.
Firstly, the insurance business is also a major focus of Berkshire Hathaway, which owns automotive insurance company Geico, reinsurance giant General Re, and a range of home and life insurance services.
Buffett wrote in a recent letter to shareholders, "Property and Casualty Insurance ('P/C ') provides core protection for Berkshire's health and growth."
In addition, from a price to earnings ratio perspective, the stocks of Anda Insurance Company look very cheap. According to FactSet data, the expected P/E ratio of the stock earlier this week was 11.3 times, while the expected P/E ratio of the S&P 500 index was 20.6 times, and the expected P/E ratio of financial stocks was 15.3 times.
Since the beginning of this year, the stock price of Anda Insurance has risen by 12%, slightly higher than the 11% increase of the S&P 500 index. After Berkshire disclosed the news, its stock price rose 8.3% in after hours trading.