THU, APR 03, 2025

WARREN BUFFETT WATCH
Special Thursday Edition

Small drop for Berkshire shares in big Trump tariff sell-off

Berkshire Hathaway shares continued to outperform the benchmark S&P 500 in today's major stock market sell-off triggered by President Trump's late-Wednesday announcement of larger than expected trade tariffs.

Berkshire's Class A shares fell 1.5% and the B shares dropped 1.4% today.

That's less than one-third of the S&P's 4.8% plunge, its biggest one-day loss since 2020, as the Covid pandemic was taking hold.

That has further widened the year-to-date lead for Berkshire's B shares over the S&P to 25.2 percentage points, up from 21.2 percentage points last Friday.

Christopher Davis of Hudson Value Partners tells Bloomberg Berkshire's stock performance has been a "rock in the tariff storm."

Referring to Berkshire's enormous $334 billion in cash, as of the end of December, he added, "On days like today, one-third of the market cap in T-Bills is a good feeling."

Another factor helping Berkshire is the insurance subsidiaries that generate a lot of the conglomerate's earnings are not as exposed to global trade as manufacturers.

In addition, CFRA's Cathy Seifert notes in the Bloomberg piece that "insurers also have pricing power — so the cost increases brought on by tariff-induced inflation in auto-repair costs and homebuilding expenses will be passed along to consumers."

Three of Berkshire's four largest equity holdings did suffer substantial losses, with Apple down 9.3%, American Express dropping 10.0%, and Bank of America falling 11.1%.

In total, the three stocks lowered the value of Berkshire's portfolio by $13.5 billion.

The impact would have been even greater if Berkshire had not substantially reduced its Apple and BofA holdings over the past several quarters.

Coca-Cola, the third largest position, added back $740 million with a 2.6% gain.

Yen bond sale plans indicate Japan stock buys will continue

In a sign that Berkshire Hathaway will be adding to its investments in Japan, the company filed a preliminary prospectus supplement with the SEC to again sell yen-denominated bonds.

Borrowing yen for its purchases allows the company to avoid currency fluctuations that could hurt the value of its holdings in five Japanese "trading houses": Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.

Stock price gain is calculated using June 1, 2020 to illustrate the increases since around the time Berkshire began buying the shares. When Buffett first revealed the holdings in November 2020, he said they had been purchased over a roughly 12-month period.

In his annual letter to shareholders in late February, Buffett wrote the companies agreed to "moderately relax" the 10% stake ceiling he promised not to exceed when he began buying the shares in 2019.

As a result, "Over time, you will likely see Berkshire’s ownership of all five increase somewhat."

On March 17, filings in Japan revealed Berkshire's stakes had increased to between 8.5% and 9.8%, leaving the 10% ceiling still intact.

The upcoming bond sale is a good indication that we will see at least some of those stakes going above 10%, perhaps later this year.

April Fool's headline has Buffett buying Tesla for $1 trillion

The GoBankingRates website got some attention this week with an April Fool's story headlined "Warren Buffett Acquires Elon Musk's Tesla for $1 Trillion in Cash."

The fact checking site Snopes ran an item the next day debunking the "rumor" and citing some social media posts that referred to the headline, although it didn't appear it was being taken very seriously.

The GoBankingRates story ended with an "APRIL FOOLS!" disclaimer, calling the article "entirely satirical ... all quotes and information in this piece are fictional."

The so-called quotes are so outlandishly fictional they are actually pretty funny.

They include Buffett telling investors on a conference call that "while I’ve publicly maintained that I don’t understand tech companies, I’ve secretly been driving a Cybertruck around my Nebraska neighborhood at night."

In addition, Buffett supposedly admits he's been "a closet electric vehicle enthusiast for years, and that he owns a collection of every Tesla model ever made."

"I’ve been telling people I still drive my old Cadillac, but the truth is I’ve put 100,000 miles on my Model S. I’ve been doing donuts in the Costco parking lot."

The finishing touch: Musk would stay with Tesla as "chief meme officer," with no restrictions on his tweeting and unlimited Cherry Coke and See's Candies.

His imagined quote: "Have you tried those peanut brittle things? Love those little guys!"

BUFFETT AROUND THE INTERNET

Some links may require a subscription

CNBC Pro (subscription): This internet stock is the best-performing name in Berkshire Hathaway’s portfolio this year, up 21%

CNBC Make It: ‘Keep your head’ if you’re spooked by tariffs: Warren Buffett suggests reading a 19th century poem when stocks fall

HIGHLIGHTS FROM THE ARCHIVE

Sometimes 'character and talents jump off the page' (2006)

Warren Buffett and Charlie Munger explain how they learned about the Israeli metalworking firm ISCAR and why they decided to buy the company.

(ISCAR founder Stef Wertheimer died last week at the age of 98. In the clip, Buffett praises Stef's son, Eitan Wertheimer, who became ISCAR's CEO in 1995 and died in 2022 at the age of 70.)

BERKSHIRE STOCK WATCH

Four weeks

Twelve months

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Apr. 3, 2025

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 December 31, 2024 as reported in Berkshire Hathaway’s 13F filing on February 14, 2025, except for:

Mitsubishi, which is as of March 17, 2025. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.
Occidental Petroleum, which is as of February 7, 2025

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

QUESTIONS OR COMMENTS

Back to normal next week with the usual Friday newsletter.

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.)

If you aren't already subscribed to this newsletter, you can sign up here.

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

900 Sylvan Avenue, Englewood Cliffs, NJ 07632

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