You don’t have to wait for Berkshire Hathaway’s quarterly 13F to know which stocks the Oracle of Omaha has been selling.
No money manager is more revered on Wall Street than Berkshire Hathaway (BRK.A) (BRK.B 1.10%) CEO Warren Buffett. In his nearly 60-year tenure as CEO of Berkshire, the aptly named “Oracle of Omaha” has led his company’s Class A shares (BRK.A) to a jaw-dropping cumulative gain of more than 5,676,000%, as of the closing bell on Nov. 6.
Even though Buffett isn’t perfect, he’s demonstrated a knack for locating amazing deals hiding in plain sight. It’s why so many investors attempt to ride his coattails and mirror his trades.
Following in Warren Buffett’s footsteps is made possible thanks to an array of required public filings that clue investors into which stocks he and his top investment aides, Ted Weschler and Todd Combs, are buying and selling. The most popular among these documents is Form 13F, which is filed with the Securities and Exchange Commission (SEC) no later than 45 days following the end to a quarter. Berkshire’s 13F is due out after the closing bell on Thursday, Nov. 14, and it’ll detail every stock Buffett and his crew purchased and sold in the latest quarter (in this instance, the September-ended quarter).
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
But what if I told you that we don’t have to wait until Nov. 14 to get the juicy details on some of Buffett’s biggest third-quarter trades?
Thanks to Form 4 filings — any time Berkshire holds at least a 10% stake in a public company, it’s required to file a Form 4 when it purchases or sells shares — overseas corporate filings, and Berkshire’s recently released operating results, we can pinpoint which three stocks were responsible for the lion’s share of the Oracle of Omaha’s recent selling spree.
Warren Buffett has been a net seller of stocks for two years (and counting)
While 13Fs can be especially helpful in identifying which stocks Berkshire’s brightest minds are buying and selling, the company’s cash flow statement is invaluable when it comes to detailing the sentiment of Buffett and his team.
In each of the last eight quarters (Oct. 1, 2022 through Sept. 30, 2024), Buffett has overseen more selling than purchasing of stocks, based on Berkshire’s consolidated cash flow statements. This net selling activity is as follows:
- Q4 2022: $14.64 billion in net-equity sales
- Q1 2023: $10.41 billion
- Q2 2023: $7.981 billion
- Q3 2023: $5.253 billion
- Q4 2023: $0.525 billion
- Q1 2024: $17.281 billion
- Q2 2024: $75.536 billion
- Q3 2024: $34.592 billion
On an aggregate basis, Buffett has sold $166.2 billion more in stocks than he’s purchased over the last two years — and this selling activity has accelerated in 2024.
According to Berkshire’s September-quarter cash flow statement, just over $36 billion in equity securities were sold. Thanks to a bit of digging, we know that close to 90% of this roughly $36 billion in selling can be traced to three stocks.
Apple: $22.5 billion (estimated)
Even though Berkshire Hathaway hasn’t yet filed its 13F for the third quarter, the company’s latest operating results spilled the beans on another big haircut for the company’s largest investment holding, tech stock Apple (AAPL -1.73%).
Berkshire’s quarterly reports always list the fair values of the company’s five largest investments in equity securities, and these “fair values” are based on the share price of each respective company as of the end of the quarter (in this instance, Sept. 30). The $69.9 billion fair value listed for Apple equates to an ownership stake of approximately 300 million shares, which is 100 million below the number of shares Buffett’s company held at the end of June.
Since Berkshire Hathaway isn’t a 10% beneficial owner in Apple, it’s not required to file a Form 4. In other words, we don’t know when during the third quarter Buffett and his team sold 100 million shares of Apple, or what the average price was on these dispositions. But with Berkshire’s top holding spending much of the quarter hovering in a fairly tight range around $225 per share, I feel comfortable estimating that approximately $22.5 billion of the close to $36 billion in net selling activity came from Apple.
For those of you wondering why the Oracle of Omaha would pare down his company’s top position, he opined during Berkshire’s annual shareholder meeting in May that he believed the corporate tax rate would eventually climb. Thus, locking in sizable unrealized gains at an advantageously low tax rate would, in hindsight, be viewed favorably by investors.
Image source: Getty Images.
Bank of America: $9.61 billion
Required SEC filings also tell us that Warren Buffett has been a persistent seller of Berkshire’s former No. 2 holding (and now No. 3, based on market value), Bank of America (BAC 2.71%).
When the June quarter came to a close, Berkshire held more than 1.03 billion shares of this money-center goliath, which equated to well over a 10% stake in the company. This meant any buying or selling activity by Buffett’s company would need to reported via Form 4 within two business days.
During the third quarter, 13 separate Form 4 filings show that Buffett oversaw the cumulative sale of around 235.17 million shares of BofA, totaling $9,609,825,813. Form 4’s list the average price of each sale, so we know precisely how much Buffett’s company is receiving in proceeds.
The impetus behind this selling may be similar to what the Oracle of Omaha alluded to during his company’s annual shareholder meeting. Berkshire has generated mammoth unrealized gains on its Bank of America position, and ringing the register on some of these gains with the corporate tax rate near a historic low might be viewed as a smart move.
Then again, this selling activity might also represent Buffett’s displeasure with a historically pricey stock market and his desire to shift a notable percentage of Berkshire’s investment portfolio into cash.
BYD: $44.3 million
Another stock that we know Warren Buffett is selling, which doesn’t show up in his company’s quarterly filed 13F, is China-based electric-vehicle (EV) manufacturer BYD (BYDD.F 0.57%).
A Form 2 filed with the Securities and Futures Commission of Hong Kong (more commonly known as a “corporate substantial shareholder notice”) on July 16 notes that 1,395,500 shares of BYD were sold at an average price of 246.96 Hong Kong dollars, or $31.76 U.S. per share. This equates to $44,321,080 in proceeds for Buffett’s company.
Whereas the Oracle of Omaha’s massive selling in Apple and Bank of America may have to do with some combination of corporate taxes and a pricey stock market, this modest pare down in BYD appears to be solely designed to get Berkshire’s stake in the company below the 5% threshold that requires Form 2 filings. Following this sale, Berkshire’s stake in BYD dipped from 5.06% to 4.94%.
In terms of operating performance, BYD has given Berkshire’s top investment minds no reason to let their proverbial feet off the accelerator. BYD’s third-quarter profits were up by double digits, with sales for the company topping North American EV giant Tesla.