Warren Buffett, the stock god, suddenly sold off on a large scale.
The bull market in the US stock market is booming, and Buffett seems to be becoming more cautious. According to the latest 13F report released by Berkshire Hathaway, a subsidiary of Warren Buffett, on the website of the US Securities Regulatory Commission, Berkshire reduced its holdings of 116 million shares of Apple stock in the first quarter of this year. Based on average stock prices, the total market value of the reduction was approximately $20.9 billion (approximately RMB 150.8 billion). Meanwhile, Berkshire also cleared another technology stock - HP (22.85 million shares).
The latest disclosed position report indicates that Buffett is returning to familiar territory. According to documents, since the second half of 2023, Berkshire has invested heavily in Anda Insurance. As of the end of the first quarter of this year, Berkshire has purchased nearly 26 million shares of Anda Insurance, with a cumulative holding value of approximately $6.7 billion (approximately RMB 48.4 billion). This has made Anda Insurance the ninth largest holdings of Berkshire.
Currently, Buffett's investment strategy seems to be shifting towards defense. As of the end of the first quarter of this year, Berkshire's cash reserves reached $189 billion (approximately RMB 1364.4 billion), a year-on-year increase of 44.7%, reaching a historic high. Buffett's caution may be due to the difficulty in discovering huge investment opportunities in the current US stock market.
Withdrawal from technology stocks, reduced holdings of 150.8 billion yuan in Apple
After the closing of the US stock market on May 15th Eastern Time, Berkshire submitted its position report to the Securities and Exchange Commission (SEC) as of the end of the first quarter of 2024, known as Form 13F.
According to the documents, as of the end of the first quarter of this year, Berkshire's overall holdings were $332 billion (approximately RMB 2.4 trillion), a decrease from the previous quarter's $352 billion, and the concentration of its top ten holdings was 91.19%.
According to data platform Whalewisdom, Berkshire Hathaway established one new target, increased its holdings by three, decreased its holdings by five, and cleared one target in the first quarter.
From this 13F table, it can be seen that Buffett is withdrawing significantly from the technology sector of the US stock market and increasing his investment in the energy and insurance sectors. Analysts say that the once familiar Buffett has returned, and this position report also sends a signal of increasing caution towards the US stock market, increasing holdings in traditional sectors, reducing holdings in technology stocks, and holding huge amounts of cash.
Specifically, Berkshire significantly reduced its holdings in Apple and cleared its holdings in HP; Make a large purchase of Anda Insurance and increase holdings in Western Oil.
In the first quarter of this year, Berkshire has cumulatively reduced its holdings of Apple stocks by 116 million shares, with its holdings dropping significantly from 50% to around 40%. Based on the average stock price in the first quarter ($180.37 per share), the total market value of the reduced holdings is approximately $20.9 billion (approximately RMB 150.8 billion).
It is worth mentioning that Berkshire sold nearly 10 million shares of Apple stock in the fourth quarter of last year.
At the shareholders' meeting in early May, Buffett mentioned that reducing his holdings in Apple's stock was due to tax reasons after obtaining substantial returns from investments, rather than based on long-term judgment of the stock.
At that time, Buffett also emphasized that Apple was a great business, unless something particularly significant happened. When Abel took over as head of Berkshire, the company would have stocks of Apple, Coca Cola, and American Express on its books.
Besides Apple, Buffett directly cleared another technology stock - HP (22.85 million shares).
HP is a globally renowned veteran technology company that primarily focuses on printing, PC, digital imaging, and software businesses. Berkshire first built a large position in April 2022 to buy over 12% of HP's shares.
However, HP's performance and stock price did not meet expectations, and Buffett had no choice but to "cut the meat" to clear his position.
For a long time, Buffett has maintained a cautious attitude towards technology stocks. He believes that high-tech companies change too quickly and do not belong to his familiar scope, making it difficult to predict their long-term competitive advantages. He prefers his familiar field and long-term unchanged enterprises.
Returning to familiar insurance fields
Another highlight of the latest disclosed position report is the exposure of Buffett's mysterious heavy holdings.
According to documents, since the second half of 2023, Berkshire has continuously increased its holdings in Chubb Insurance. As of the end of the first quarter of this year, Berkshire has purchased nearly 26 million shares of Chubb Insurance, with a cumulative holding value of approximately $6.7 billion (approximately RMB 48.4 billion).
This has made Anda Insurance the ninth largest holdings of Berkshire. According to Dow Jones market data, Berkshire holds 6.4% of its total equity in Anda Insurance.
After the announcement, the stock price of Anda Insurance surged by over 8% after the US stock market closed, with a cumulative increase of about 12% this year. The latest total market value reached 107.2 billion US dollars (approximately 773.9 billion yuan).
It is understood that Anda Insurance is an insurance company headquartered in Zurich, Switzerland, with operations in 54 countries and regions worldwide. It is one of the largest publicly traded property and accident insurance companies in the world, ranking fifth in total market value among listed insurance companies.
Analysts point out that one of the reasons why Buffett is interested in Anda Insurance may be that the company's valuation is low, and Buffett is very familiar with the company's business model. According to FactSet data, earlier this week, the P/E ratio of Anda Insurance was 11.3 times, while in contrast, the P/E ratio of the S&P 500 index was 20.6 times, and the average P/E ratio of the financial sector was 15.3 times.
Insurance business is one of Berkshire's core businesses, as it provides a stable source of income and profits for the company. Berkshire has been expanding its insurance business through acquisitions, including the acquisition of car insurance market leader Geico, global reinsurance giant General Re, and several other insurance companies.
Buffett recently stated in a letter to shareholders, "Property and Casualty Insurance ('P/C ') is at the core of Berkshire's happiness and growth."
Meanwhile, Buffett continued to increase his bets on Western oil companies, increasing his holdings by 4.3 million shares in the first quarter. Buffett mentioned in his shareholder letter released in February that Berkshire is particularly optimistic about Western oil companies holding significant amounts of oil and gas in the United States, as well as their leading position in carbon capture.
The report also shows that in the first quarter of this year, Berkshire reduced its holdings in US energy giant Chevron (3.11 million shares), building materials manufacturer Louisiana Pacific (440000 shares), SiriusXM (3.56 million shares), and Paramount Global B (55.79 million shares).
Holding 1.36 trillion yuan in cash, what did Buffett smell?
Various signs indicate that Buffett's investment strategy seems to be shifting towards defense.
As of the end of the first quarter of this year, Berkshire's cash reserves reached $189 billion (approximately RMB 1364.4 billion), an increase of 44.7% year-on-year, reaching a historic high. Buffett predicts that the company's cash reserves may reach $200 billion in the future.
Buffett's caution may be due to the difficulty in discovering huge investment opportunities in the current US stock market.
From the perspective of the overall background of the US stock market, the US stock market closed overnight, with the three major indexes collectively reaching a new historical high, with the Nasdaq rising 1.4%, reaching a new historical closing high for two consecutive days; The S&P 500 index rose 1.17%, closing at 5300 points for the first time in history; The Dow Jones Industrial Average rose 0.88%, breaking the closing record high set on March 28th.
As is well known, Buffett's consistent investment strategy is: "Fear when others are greedy, be greedy when others are afraid.". The current US stock market is undergoing a super bull market, with very optimistic and greedy market sentiment and high market concentration. There may be huge risks hidden behind this, which is also one of the reasons why Buffett remains cautious.
On the other hand, against the backdrop of historic highs in the US stock market, high-quality companies are no longer cheap, and even the valuations of most listed companies are biased towards higher prices. This is also the reason why Buffett holds a huge amount of cash and cannot take action.