Each quarter, the investment company of Warren Buffett (Berkshire Hathaway) has to report any changes in the portfolio. This gives a great insight into what the legendary investor is buying or selling. The filing for the last quarter of 2022 is just out, with Buffett making some interesting changes. Here’s the information that I’m mulling over.
Some big cuts
One of the most surprising moves was selling a large portion of his stake in Taiwan Semiconductor. He cut 86% of the stock he owned in the company. This position was only intitated back in Q3, so Buffett bought and sold this within the space of just a few months.
The filing doesn’t come with detailed reasoning on why the actions were taken, so I have to fill in the blanks myself. It’s unusual for Buffett (who styles himself as a long-term investor) to exit after such a short period of time.
It could be related to concerns around China more broadly. Or given the overall portfolio, he might have felt that there was too much exposure to electronics and tech, especially given the size of the holding in Apple stock.
Buffett also reduced his stake in some financial services stocks. This included selling US Bancorp and BNY Mellon shares.
Still buying Apple
Warren Buffett clearly didn’t read my article published earlier this year when I explained why I thought he was too exposed to Apple. In fact, due to an acquisition via a subsidiary company during the quarter, he added another 334,000 Apple shares.
This ultimately means that Apple is by far the largest holding for the business, amounting to a whopping 5.8% of the total available Apple shares. Given that the market cap of Apple is $2.46trn, it’s a big number!
My takeaways from the news
Straight off the bat, I’m not going to be following Buffett with his purchases (either directly or indirectly) of Apple. It’s not that I don’t like the business, but I feel he’s not diversified enough in his portfolio. As a result, a swing lower in the share price could wipe out all the gains from his other stocks.
Regarding Taiwan Semiconductor, I also disagree with him. The stock has been on my watchlist for the past couple of months ever since I found out that Buffett had bought. I don’t see anything wrong with the company. In fact, with China now reopening and supply chain issues easing, I think the business could do well over the next year. As a result, I’m thinking about buying.
I do respect the great investor, with his track record for profitability vastly exceeding mine. But this speaks to one of the key themes of being an investor. It’s all subjective. I might think a stock will rise when someone else thinks it will fall. That enables them to sell the share and for me to buy it. It’s how the stock market is able to function efficiently.
I’ll check in with Buffett in the summer and see who was right!