This is what Warren Buffett bought and sold last quarter

Jon Smith discusses the key stocks that Warren Buffett bought and sold recently, and what this indicates about his mindset right now.

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Warren Buffett at a Berkshire Hathaway AGM

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In the US, quarterly filings of disclosures are required by investment managers. This is known as a 13F report. Naturally, given the size of stocks that legendary investor Warren Buffett owns via his company Berkshire Hathaway, he has to report on what he has been buying and selling.

His latest 13F filing for Q2 have just been released. Even though it relates to the recent past, it’s still very useful in understanding his current thinking on the market. Here’s what investors need to know.

Getting out the wallet

Let’s start with the stocks being bought. Buffett purchased an additional 2.6m shares in Capital One Financial. This took his overall shareholding up from 9.9m shares in Q1 to 12.5m by the end of Q2.

The US bank took a hit in Q2 as investors continued to be fearful about the domestic banking system. Yet clearly Buffett took the opposite view and saw it as a smart time to pick up some more Capital One stock. This relates to his core investment strategy of buying value stocks.

He also bought some homebuilder shares. This includes DR Horton, NVR and Lennar. These are all US-based companies with a combined investment of $823m. I’d argue that the US property market is in a similar position to the UK. Higher interest rates are putting pressure on the market, with most homebuilders seeing a fall in the share price over the past year.

From Buffett’s recent actions, it would suggest again that he’s buying these as part of a long-term value play. The aim will be that when the economy starts to pick up, rising house prices will help to lift property shares.

Trimming some unwanted stocks

One of the largest moves in the quarter was selling most of the holdings in Activision Blizzard. The tech company is in the process of being acquired by Microsoft. Berkshire Hathaway has held this stock for around three years, which isn’t a long time by normal standards.

However, I think it’s clear there isn’t much more potential for the stock to run higher, given the deal is looking more and more certain. Therefore, it does make sense to consider selling.

Buffett also sold a portion of his holdings in many other stocks. These include Chevron, General Motors, Globe Life, and more. I think this speaks to the fact that the US stock market has enjoyed a very strong run so far this year. Yet it does seem to have de-coupled from economic reality. Inflation is still a problem and high interest rates will dampen growth in the US. Therefore, I feel Buffett’s being cautious.

During Q2, he sold $8bn worth of stocks and bought $4.5bn. Sure, there are still some opportunities out there, hence why he was buying. Yet, overall, it paints a more subdued picture right now. I feel investors should imitate him and be selective in what to buy right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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