As a recognized "stock god" in the global investment community, Buffett's every move has attracted much attention.
On November 24 local time, Berkshire Hathaway withdrew from the Indian "Alipay" Paytm after selling all its shares in the company at a price of 13.71 billion rupees (164 million US dollars) through block trading.
Exchange data shows that BH International Holdings, a subsidiary of Berkshire, sold over 15.6 million shares of the digital payment company's stock at a weighted average price of 877.29 rupees per share.
Buffett loses 30% and cuts meat
Berkshire began investing in Paytm at a valuation of approximately $12 billion in 2018, and in the following quarters, Paytm's valuation increased to $16 billion. But then, Paytm's stock price plummeted by 75%.
Afterwards, although the stock rebounded significantly by 68% and the loss margin narrowed, it was still 60% lower than the IPO price. Therefore, Berkshire Hathaway decided to stop losses in a timely manner and ultimately fully liquidate its position.
It is estimated that Berkshire Hathaway sold a total of 13.7 billion rupees of Paytm stocks, resulting in a loss of approximately 6.2 billion rupees and an investment loss rate of nearly 30%.
In fact, this is not the first time Berkshire has failed in the field of electronic payments. Public information shows that in addition to Paytm, Berkshire Hathaway also invested in Brazilian digital payment company StoneCo in 2018, all facilitated by investment manager Todd Combs.
But although the company performed well after going public on NASDAQ in October of that year, with its stock price doubling at one point, it has entered a downward trend since 2021. On Friday, the US stock market was trading at $14.4, a nearly 54% drop from its IPO price.
SoftBank and Ant also reduced their holdings
As the largest digital mobile payment and business platform in India, Paytm is regarded as the Indian version of "Alipay". As of September this year, BH International Holding Company held 2.46% of the shares of Paytm.
This is not the first time Paytm has been underweight recently.
According to The Paper, on November 17th, SoftBank Group sold a $215 million (approximately RMB 1.54 billion) stake in Paytm.
SoftBank Group sold 29 million Paytm shares through bulk trading at a price of 555-601.45 rupees per share (approximately 49-53 yuan).
In August, Ant Group announced the sale of its 10.3% stake in Paytm.
The announcement shows that Vijay Shekhar Sharma, founder and CEO of Paytm, has reached an agreement with Antfin (Netherlands) Holding B.V. to acquire Antfin's 10.3% stake in Paytm. The above transaction will be conducted at a market price of 628 million US dollars (approximately 4.509 billion RMB).
After the completion of the above transaction, Sharma's shareholding in Paytm will increase to 19.42%, while Antfin's shareholding will decrease to 13.5%, no longer being Paytm's largest shareholder.
According to public information, when Paytm went public, SoftBank Group was the second largest shareholder, while Ant Group was the largest shareholder.
Buffett's Q3 clearance or reduction of holdings in multiple stocks
Previously, on November 14th local time, Berkshire Hathaway submitted the latest 13F position statement to the US Securities and Exchange Commission (SEC). According to regulatory documents, as of September 30, 2023, Berkshire's total holdings in the US stock market were $313.257 billion, a 10% decrease from the previous quarter's $348.194 billion.
Among the top ten holdings, Apple remains the largest heavyweight stock, accounting for 50% of Buffett's total holdings. Buffett only reduced his holdings of Chevron by 10% due to changes in the top ten heavily held stocks.
Among the cleared stocks, there are Activision Blizzard, UPS, General Motors, snack manufacturer Yizi, chemical company Seranis, Procter&Gamble, and Johnson&Johnson. Among them, Procter&Gamble and Johnson&Johnson are both companies that Buffett has been holding for a long time.
In addition, the stock god also reduced its holdings in HP, Amazon, Aon Insurance, Global Life Insurance, and Markle Insurance.
Compared to last year, as the interest rate hike cycle approached its peak, Buffett shifted more towards defense. According to foreign media calculations, the return rate of the stock god in the first three quarters was about 14.5%, lagging behind the 17.6% return rate of the S&P 500.
As of Q3, Buffett held a total of $157 billion. In the first three quarters of this year, a total of $23.6 billion in stocks were sold, compared to a net purchase of $48.9 billion in stocks in the same period last year.
Some people speculated that after the stock was converted back into cash, Buffett was more likely to buy long-term US bonds with soaring yields. Data showed that Buffett's holdings of treasury bond increased from US $97 billion to US $126 billion in the third quarter.
In the first three quarters of this year, Buffett has received $11 billion in interest and dividends, which is twice the level of the same period last year and accounts for 4-5% of the total cash ratio.
Stock God arranges a will
And the American stock market god also foresaw that his legendary career may come to an end. According to China Securities News, on November 21st US time, the "stock god" Buffett once again donated approximately $866 million in Berkshire Hathaway stocks to four charitable organizations.
On the same day, 93 year old Buffett issued a shareholder letter designating his children as executors of his will. After his death, more than 99% of his wealth will be donated to charitable organizations, and Berkshire already has a suitable CEO successor. He said, "I feel good, but I am fully aware that I have entered extra time."
In this shareholder letter, 93 year old Buffett rarely revealed information about his successor. Buffett stated that Berkshire has a "suitable CEO" and a "suitable board of directors" to succeed. He said in the letter, "At the age of 93, I felt good, but I was fully aware that I had entered extra time."
According to previous arrangements, 61 year old Berkshire Vice Chairman Greg Abel has been appointed as Buffett's successor, while Howard Buffett will become non-executive chairman. Abel became Buffett's legal heir in 2021 and has been responsible for managing most of Berkshire's vast empire, including energy, railways, and retail.
The "Stock God" assured Berkshire's shareholders in the letter that even without his supervision, the "empire" he has cultivated over the past 60 years will withstand the test of time. He said, "In the short term, I will use my significant shareholding to support Berkshire in continuing its uniqueness. However, soon Berkshire will earn its reputation on its own. Corruption may occur in all types of large institutions, whether they are government, charitable, or profit seeking. But this is not inevitable, Berkshire's advantage lies in its ability to withstand the test of time."
Goldman Sachs Report:
Global hedge funds sell technology stocks
And for Buffett's series of sell offs. Wall Street insiders believe that it may indicate that Buffett is not looking good at the US stock market in the future.
Lee Munson, President of Portfolio Wealth, believes that Buffett's message is to be cautious as he has anticipated the troubles that will arise in the US stock market in 2024.
Stock analysts at New York investment bank KBW (Keefe, Bruyette&Woods) believe that Buffett's decision to wait and see may be due to the current high valuations in the US stock market. If the market valuation does not decrease with the rise of interest rates, then the correct approach is to do nothing.
According to the latest report sent by Goldman Sachs to clients, global hedge funds are selling technology stocks, selling long positions and exiting short bets at the fastest weekly rate in seven months.
The report states that from November 10th to November 16th local time, traders reduced their long and short positions in semiconductor manufacturers and communication equipment suppliers, while exiting their long positions in software companies. At the same time, the stock valuation of the S&P 500 index has climbed to a two month high, far above the long-term average.
Florian Ielpo, macro investment director of Lombard Odier Investment Managers, said that the foam of US stock valuation and the weakening interest of hedge funds may mark the end of the "trend concentration" of US stock technology stocks in recent years.
Ilpo stated that the valuation of US stocks is very expensive, but it is difficult to say how much they are more expensive. To exceed this level, significant profit growth is required, which is largely reflected in the stock price, taking into account analyst expectations for next year.
According to Goldman Sachs' latest report, hedge funds are also selling US consumer goods stocks at the fastest pace since April 2020, and the industry has experienced one of the most severe sell-offs in the past five years.
For investor reference only and does not constitute investment advice.