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Puzzlers from Berkshire's stock portfolio disclosure
In its Q3 stock portfolio disclosure last night, Berkshire Hathaway revealed that it reduced its Wells Fargo stake by 7.7% between June 30 and September 30.
The 31.4 million shares sold have a market value tonight of almost $1.7 billion.
Even by Buffett standards, that's a significant amount of money. And with a record $128 billion of cash on Berkshire's books, a sale to buy something else seems unlikely.
The decline is also the biggest quarterly percentage drop for WFC since at least 2012, when I started collecting BRK's portfolio numbers. Berkshire has reduced its WFC holdings in nine of the past 10 quarters.
Is the impetus for the sales simply to keep the stake below the key level of 10% of a bank's shares outstanding? That's where more intense Federal Reserve regulatory scrutiny kicks in.
That's entirely possible, and the explanation offered most often in recent years. 
But as the chart above shows, when you compare the number of shares in Berkshire's stake (the orange portion of each quarter's bar) with Wells Fargo's total shares outstanding (the orange plus the blue sections), the closest Berkshire's come to 10% was 9.6% around the beginning of 2017.
At the end of this year's third quarter, Berkshire owned just 8.9% of Wells Fargo's total shares, giving it substantial breathing room, even as the bank's share buybacks continue to reduce the shares outstanding.
It makes for a decent case that Buffett may finally be souring on Wells Fargo, even as he's been defending its long-term prospects throughout the fake account scandal.
(In May, 2018, Buffett said in a CNBC interview that Wells would "very likely" outperform other big banks over the next decade.)
One thing does seem clear. Buffett's favorite bank lately has been Bank of America. At $31.2 billion, the value of Berkshire's stake is 54% larger than its Wells Fargo stake, currently worth $20.4 billion.
Berkshire now owns 10.5% of Bank of America's shares outstanding, and has asked the Federal Reserve for clearance to buy more.
CNBC.com notes that BofA is up 36% this year and suggests Buffett's "bit of a cold streak" may be nearing its end as bank stocks rebound.
As activist investor Carl Icahn continues to wage a proxy fight against Occidental Petroleum over its planned acquisition of Anadarko and recently cut his own stake in OXY by nearly a third, Berkshire did some buying.
As of September 30, Berkshire owned 7.5 million shares, worth around $290 million.
That small size is a strong indication one of Berkshire's portfolio managers, who work independently of Buffett, did the buying. And that makes it likely the purchase is not related to Buffett's own decision earlier this year to loan OXY $10 billion at 8% per year to finance its Anadarko deal.
OXY's acceptance of those terms is one of the reasons Icahn thinks its management needs to be replaced. ("The Buffett deal was like taking candy from a baby and amazingly [the OXY CEO] even thanked him publicly for it.")
Berkshire owns a number of furniture stores as subsidiaries, such as Nebraska Furniture Mart, Jordan's Furniture, Star Furniture, and R.C. Willey Home Furnishings.
But it doesn't look like Berkshire's purchase of a stake in RH, the parent of Restoration Hardware, is part of the pattern.
The value of the stake, currently $227 million, is too small to be a Buffett pick. The decision to buy was almost certainly made by one of BRK's portfolio managers, Todd Combs or Ted Weschler.
Barron's notes that it's "been a controversial stock for years" with big losses and big gains. Almost a third of the company's stock has been borrowed by short sellers who hope to profit from a price decline.
Today it closed with a gain of around 8%. BUFFETT AROUND THE INTERNET Some links may require a subscription
BERKSHIRE STOCK WATCH
Berkshire Hathaway Class A shares closed at $329,405 Friday, up 5.2% over the previous four weeks, and up 1.0% from one year ago. Berkshire Hathaway Class B shares closed at $219.74, up 5.3% over the previous four weeks, and up 1.0% from one year ago. The benchmark S&P 500 index closed at 3120.46, up 4.5% over the previous four weeks, and up 14.3% from one year ago. BERKSHIRE'S TOP STOCK HOLDINGS
Berkshire's top stock holdings by market value, based on today's closing prices. The number of shares held is as of September 30, 2019, as disclosed in the company's November 14 13F SEC filing.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
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See you next week.
-- Alex Crippen, Warren Buffett Watch Editor
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