FRI, JAN 06, 2023
Berkshire positioned for another strong year in 2023 — Barron's
In 2022, Berkshire Hathaway's operating income increased, it made substantial additions to its stock portfolio, and its stock outperformed the S&P 500.
Barron's expects another "strong" year in 2023.
Andrew Barry writes:
"Berkshire Hathaway stands to benefit from an upturn in insurance profits, its acquisition of insurer Alleghany in the fourth quarter of 2022, higher yields on the company's big cash position and income from all the 2022 equity investments led by Chevron and Occidental Petroleum that were spearheaded by Warren Buffett, its 92-year-old CEO."
Stock buybacks, however, are a "wildcard." They slowed through the first nine months of last year, compared to 2020 and 2021, and "some investors would like to see Berkshire get more aggressive," but Buffett may see them "as less appealing as the stock's valuation has moved up to an estimated 1.5 times projected 2022 year-end book value from 1.3 times at the start of 2022."
Another wildcard, Barron's points out, is Alleghany's investment portfolio, which includes $15 billion of bonds and around $3 billion of stocks.
"Some think he will sell the stocks -- and even the bonds. It's notable that Alleghany has about as large a bond portfolio as Berkshire despite being a fraction of its size. This reflects Buffett's long aversion to bonds and a preference for equities."
Tesla cuts prices in China after sales lag behind Berkshire-backed BYD
Tesla appears to be intensifying its price war in China.
Reuters reports that based on the company's website, Tesla reduced prices this week on its Model 3 and Model Y cars by between 6% and 13.5%.
It is the second cut in less than three months, bringing the total reductions in China to between 13% and 24% since September.
Last month, Tesla delivered 55,796 electric vehicles made in China, a five-month low.
That's well below the 234,598 EVs and plug-in hybrids sold by BYD, which led all other brands in Chinese EV sales.
BYD's Atto 3 EV car is displayed at the Thailand Intl. Motor Expo, in November. REUTERS/Athit Perawongmetha
Fortune notes, however, even without the plug-ins, BYD is outselling Tesla in all-electric vehicles. It credits BYD's more diverse and less expensive models.
BYD is also challenging Tesla by introducing two new luxury EV brands this year, including an SUV that would be one of the most expensive electric vehicles sold in China.
In its most recent filing, Berkshire reported holding 164 million BYD shares as of December 8, currently valued at $4.3 billion.
That's down 27% from the 225 million shares it held as of the end of 2021. The stake was originally purchased in 2008 for around $230 million.
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Jan. 6, 2023
Berkshire's top holdings of disclosed publicly-traded U.S. stocks, and BYD, by market value, based on today's closing prices.
Holdings are as of September 30, 2022 as reported in Berkshire Hathaway’s 13F filing on November 14, 2022, except for:
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
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-- Alex Crippen, Editor, Warren Buffett Watch