FRI, OCT 18, 2024

WARREN BUFFETT WATCH

Berkshire moves quickly to bring BofA stake back below 10%

Just seven days ago, we thought we would have to wait until mid-February's end-of-year portfolio snapshot to see if Berkshire Hathaway sold more Bank of America shares.

Since mid-July, a string of sales had cut Berkshire's holding by 25%, and brought its stake from more than 13% of the bank's outstanding shares to a sliver under 10%.

Going under that level meant Berkshire would be free of the SEC rule requiring the prompt disclosure of any additional sales. (It also frees Berkshire from some bank regulatory obligations.)

But just two business days later on Tuesday, Bank of America released its third quarter financial results showing it bought back $3.5 billion of its own stock during the period, reducing its outstanding shares by around 70 million.

Even though Berkshire had not added to its share count, the reduction in the denominator of the stake calculation meant it now owned 10.08% of BAC's outstanding shares.

It didn't wait long to adjust.

In a filing last night, Berkshire disclosed its Tuesday sale of another 8.7 million shares for $370 million, an average price of $42.55.

That reduced its BAC holding to 766,305,462 million shares, which is 9.97% of the bank's new outstanding share count. (So much for the "round number" theory, at least for the moment.)

So, we're pretty much back where we were, potentially having to wait a few months to see if Berkshire just wants to keep its stake a bit below 10%, intends to cut back to the 700 million low-cost shares it obtained in 2017 as part of a 2011 investment, or plans to completely remove BofA from its portfolio as it has with a few other financials in recent years, including Goldman Sachs and JP Morgan Chase.

Berkshire pays higher price for modest addition to satellite radio bet

Berkshire Hathaway bought more than 1.5 million shares of Sirius XM Holdings for $42 million this week on Wednesday, Thursday, and today.

It paid an average price of $27.05.

That's an 11% price increase over the average price of $24.33 it paid for almost 3.6 million shares over three days last week, when it spent a total of $86.7 million in the wake of the September reorganization that split off Sirius XM from Liberty Media.

Berkshire had to pay more to keep buying because SIRI shares rallied Monday after the disclosure of last week's purchases, then built on their gains to finish the week up 10.75%.

It's a textbook example of the "copycat" buying that Berkshire would prefer to avoid.

But, unlike its reduced BofA stake, Berkshire owns more than 10% of Sirius' shares, so it has to report purchases or sales within two business days.

As of today, Berkshire owns 110.3 million SIRI shares with a market value of $3.0 billion.

It is, by far, the biggest Sirius shareholder, with a 32.5% stake.

BUFFETT AROUND THE INTERNET

Some links may require a subscription

Investing.com: David Einhorn warns: Buffett's stock sales hold key insights for investors

Barron's (subscription): Berkshire’s Move to Sell Apple Doesn’t Look Good. It May Have Left $25 Billion on the Table.

HIGHLIGHTS FROM THE ARCHIVE

Never make an emotional investing decision (2023)

Warren Buffett and Charlie Munger explain why you should be a “no emotion” person when it comes to making financial decisions.

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BERKSHIRE STOCK WATCH

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Twelve months

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Oct 17, 2024

Berkshire's top holdings of disclosed publicly traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.

Holdings are as of June 30, 2024 as reported in Berkshire Hathaway's 13F filing on August 14, 2024, except for:

Bank of America, which is as of October 15, 2024
Mitsubishi, which is as of June 12, 2023. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

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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

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