FRI, FEB 17, 2023
Berkshire surprises investors with sudden Taiwan Semi sale
What happened to Berkshire's famous "buy and hold" strategy?
In its SEC filing this week revealing the stocks in its portfolio as of December 31, Berkshire Hathaway listed just 8.3 million shares (more accurately, American depositary receipts) of Taiwan Semiconductor.
That's an 86% reduction from the 60 million shares, worth roughly $4 billion, it reported holding at the end of the third quarter on September 30, and all of them had been purchased since the end of June.
Taishin Securities Investment Advisory's Tony Huang is quoted by Bloomberg as saying, "It’s surprising that Berkshire cut its holding so much in just a quarter, which differs from its past practice of long-term investment and continuing to add shares."
Bloomberg points out that the "chip industry has had to contend with Covid-induced supply disruptions in China and a slump in demand for electronics amid surging inflation."
In addition, it says, governments around the world are responding to increased political tensions in the region by pushing the company to diversify its production footprint, which could drive up costs.
CFRA Research's Cathy Seifert tells Reuters, "Berkshire made a small profit on TSMC. It was not a huge, huge win for Berkshire."
Based on her estimate that Berkshire bought at roughly $68.50 per share and sold at $74.50, it would have netted around $310 million on the almost 52 million shares it sold.
Last year, Berkshire also did a turnaround on Verizon, although it wasn't as rapid as this one.
After building a stake worth around $9 billion in the second half of 2020, it sold almost all of it in the first quarter of 2022.
While Buffett is often quoted as saying his favorite holding period is "forever," that doesn't mean he will never sell a stock.
At the 2009 annual meeting he told investors that Berkshire will sell "if we lose confidence in the management, if we lose confidence in the durability of the competitive advantage, if we recognize we made a mistake when we went into it. We sell plenty of times."
But, he added, if you have a "wonderful business" then "when in doubt, keep holding."
The rest of the portfolio
Berkshire also sharply reduced its holdings in two banks during the quarter.
It sold 91% of its U.S. Bancorp stake, reducing its value by almost $3.8 billion based on the December 31 close.
It also cut its Bank of New York Mellon holdings by 60%, roughly $1.7 billion worth.
Berkshire made a more modest reduction in its arbitrage bet on Activision Blizzard, selling 12% of its shares. The video game company's planned acquisition by Microsoft looks increasingly doubtful.
Here's the complete list of what happened with Berkshire's portfolio during the fourth quarter, ranked by the dollar value of the change in shares, using December 31 closing prices.
Munger loves BYD but "you can understand why someone would sell"
CNBC's Becky Quick, who was relaying shareholder questions to Munger as part of our exclusive video stream of the event, asked about the sales.
He replied that BYD is selling for about 50 times its earnings and "that is a very high price."
"You can understand why someone would sell BYD's stocks at 50 times earnings...
"It's not a cheap stock. On the other hand, it's very remarkable company."
Asked why he prefers BYD to Tesla, Munger said, "BYD is so much ahead of Tesla in China ... it's almost ridiculous."
Here's are two video clips of what else Charlie had to say
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Feb. 17, 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 December 31, 2022 as reported in Berkshire Hathaway’s 13F filing on February 14, 2023, 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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Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.
-- Alex Crippen, Editor, Warren Buffett Watch