Stocks Buffett Just Sold: Warren Buffett knows that the market moves in cycles and doesn’t get spooked by volatility. In fact, when stock prices dip, he often buys additional shares to lock in the discount.
Buffett’s strategy is simple. He buys solid companies at a fair price and holds onto them for the long haul. But does that mean Warren Buffett never sells stock? Absolutely not. He knows when to cut his losses.
In 1988, Buffett explained to Berkshire Hathaway shareholders that his “favorite holding period is forever.” He went on to say, “We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint.”
In other words, Buffett’s goal is to choose companies that will deliver profits, and he doesn’t sell when share prices go up. He lets those returns compound, which multiplies his earnings many times over. The Berkshire Hathaway portfolio has particularly low turnover, and it’s a big deal when Buffett adds a new stock to his collection.
Despite his tendency to look for long-term commitments, Buffett knows that even the most promising companies can fail to live up to expectations. Buffett isn’t shy about moving on to a better opportunity when it appears certain that an asset won’t perform to its potential. As he has said many times, “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.”
Berkshire Hathaway Portfolio
Berkshire Hathaway filed its second quarter report with the Securities and Exchange Commission (SEC) on August 15, 2022, and there were a few surprises.
Though the market is down and many stocks are trading at deep discounts, Berkshire Hathaway didn’t add any new companies to its portfolio.
It also appears that Buffett lost faith in four companies that have held a place in the Berkshire Hathaway portfolio for some time.
Berkshire Hathaway sold off some or all of its stake in:
Does Warren Buffett Still Own GM Stock?
The auto industry has had a lot of trouble dealing with the economic challenges of the past three years. Between manufacturing delays due to COVID, supply chain issues, computer chip shortages, a tight labor market, and rising gas prices, it has been difficult to meet consumer expectations around vehicle selection and price.
Many buyers have elected to purchase used cars instead – or they have decided to stick with their current vehicles until automakers get back on track.
Berkshire Hathaway added General Motors stock to its portfolio ten years ago when the carmaker emerged from bankruptcy after the 2009 financial crisis. However, Buffett has been reducing Berkshire Hathaway’s stake in GM for several consecutive quarters.
During the three months ending June 30, 2022, Berkshire Hathaway sold roughly 9.2 million GM shares, leaving it with a total of 52.8 million shares worth approximately $2.08 billion. That puts Berkshire Hathaway’s stake in GM at 3.6 percent.
Most analysts are puzzled by Buffett’s decision to sell GM stock because there is reason to believe that the company will turn things around once supply chain issues ease.
General Motors has projected that its revenue will double by the end of the decade. Its position in the electric vehicle market suggests that the company will benefit as consumers replace gasoline-powered cars with electric alternatives. Buffett appears to be alone in his opinion that it’s time to sell GM stock, as a majority of market experts say General Motors is a buy.
Is STORE Capital Profitable?
Real Estate Investment Trust (REIT) STORE Capital first caught Warren Buffett’s attention in 2017. That year, Berkshire Hathaway bought a 9.8 percent stake in the firm for a total of $377 million.
STORE became the only REIT in Berkshire Hathaway’s portfolio, and most industry experts assumed that Buffett selected the stock because of the company’s carefully designed business model.
STORE’s process for selecting properties includes buying below market value, and STORE ensures that tenants are in the type of business that can withstand adverse economic conditions.
In the second quarter of 2022, Berkshire Hathaway cut its position in STORE Capital to 2.5 percent of the company. STORE stock is down approximately 22 percent year-to-date, and it simply hasn’t been able to fully recover from the pressures of the pandemic.
Still, this sale came as something of a surprise for those who follow Warren Buffett’s trades. After all, STORE Capital has an above-average dividend yield of 5.4 percent, and the company is profitable.
Perhaps Buffett isn’t optimistic about the future of the real estate market, and his goal is to cut his losses before they deepen.
Why Did Buffett Sell U.S. Bancorp Stock?
Warren Buffett has been a long-time fan of financial services companies. Berkshire Hathaway’s portfolio includes a collection of banks, along with insurance companies and credit card services.
U.S. Bancorp has been in Berkshire Hathaway’s portfolio for decades, and it avoided the cut list when Buffett sold off shares of Goldman Sachs, JPMorgan Chase, and Wells Fargo in the past few years.
However, as of second quarter 2022, it seems that U.S. Bancorp’s time has come. Berkshire Hathaway sold five percent of its stake in the company, leaving it with a bit less than 120 million shares. The value of those shares comes in around $5.9 billion, which represents eight percent of U.S. Bancorp.
The sale of U.S. Bancorp stock is another unexpected move from Warren Buffett, as the company is an industry leader with a long history of solid, reliable returns. It appears that Buffett is rethinking his reliance on traditional banks, and he is paying more attention to companies with a strong fintech component.
For example, Buffett backed Brazilian fintech NuBank, which has taken a commanding lead in the Latin American financial services market.
Buffett may agree with industry experts who predict that electronic banking will become the method of choice for consumers on a global scale, and he is adjusting Berkshire Hathaway’s portfolio to reflect the digital transformation. Market analysts seem to be aligned with Buffett’s assessment of U.S. Bancorp’s future, as two out of three rate the stock “hold” rather than “buy.”
Did Warren Buffett Sell His Verizon Stock?
When Berkshire Hathaway filed its second-quarter reports, one stock was noticeably absent from its portfolio. Warren Buffett sold out of Verizon completely, ending what turned out to be a relatively short relationship with the telecommunications provider.
Buffett originally bought into Verizon years ago, but the biggest investment came at the end of 2020 when Berkshire Hathaway bought $8.6 billion in Verizon stock. Within months, it appears that Buffett had buyer’s remorse after it became clear that Verizon’s competition is better suited to adapt to changes in the industry.
Verizon is losing market share at a rapid rate, and it was recently forced to reduce its full-year 2022 forecast. Verizon stock is down more than 20 percent year-to-date, and it has lost ten percent of its value over the past five years.
Berkshire Hathaway sold most of its Verizon shares during the first quarter of 2022 and has now exited the company altogether. However, Buffett still owns 5.2 million shares of T-Mobile, valued at more than $744 million. That suggests Buffett believes in the future of the telecommunications industry – just not in Verizon’s ability to be a key player.
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