People who follow the stocks that Warren Buffett buys and sells just got a surprise. Berkshire Hathaway (BRK.B (opens in a new tab)$308.91), of which Buffett is president and CEO, revealed a huge new stake in Semiconductor manufacturing in Taiwan (TSM (opens in a new tab)$72.80).
Warren Buffett’s holding company recently bought 60.1 million shares in the world’s largest pure-play semiconductor foundry. TSM, which is a key source of chips for the global supply chain, has seen its stock hammered this year as investors worry about weakening demand and increased competition.
Worth $4.1 billion at the end of the third quarter, TSM is now Berkshire Hathaway’s 10th largest holding company. Buffett made the purchases during the third quarter, according to a regulatory filing (opens in a new tab) made on November 14.
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Warren Buffett’s big bet on the chip business comes a bit out of nowhere. On the one hand, it has recently focused on adding exposure to names in the energy sector such as western oil (OXY (opens in a new tab)) and Chevron (CLC (opens in a new tab)). And although Apple (AAPL (opens in a new tab)), with a weighting of 42%, is by far the largest holding Berkshire Hathaway Stock Portfolioonly six of the holding’s 48 stocks and two ETFs come from the technology sector.
The bottom line, however, is that Berkshire Hathaway was again a net buyer of stocks during the quarter. Net purchases of Berkshire Hathaway stock (or the value of purchases minus sales) were about $3.6 billion in the third quarter, according to the company’s quarterly report.
Note that these net purchases came despite the fact that it was generally harder to find bargains. The S&P 500 eventually lost 5.3% on a price basis during the third quarter, but at one point in mid-August the benchmark was up almost 14% from the end of the quarter. second trimester.
Either way, Warren Buffett was more greedy than fearful this past quarter, as Berkshire Hathaway’s third quarter net buying was in line with its second quarter activity. Granted, Q3 net buying paled in comparison to how Warren Buffett started the year, but it was a different market back then.
Berkshire Hathaway’s first-quarter buying spree amounted to $41.5 billion in net stock purchases — Buffett’s biggest stock spree since the start of 2008. The S&P 500, however, lost more than 12% at one point in the first quarter. This likely made it easier for Buffett to find stocks for sale. It is also true that the energy giant Chevrona component of the Dow Jones Industrial Average, accounted for about half of Berkshire Hathaway’s first-quarter frenzy.
Other new investments in the third quarter included the purchase of 5.8 million shares of the home products maker Louisiana Pacific (LPX (opens in a new tab)). The stake, worth $297 million at the end of the third quarter, is small enough that it could be the work of co-portfolio managers Ted Weschler or Todd Combs.
Berkshire Hathaway also initiated a small stake in an investment bank Jefferies Financial Group (I F (opens in a new tab)), buying 433,558 shares worth $12.8 million. Like LPX, the JEF position represents less than a tenth of a percent of Berkshire Hathaway’s total portfolio value. Again, this is probably not a Warren Buffett stock pick.
Elsewhere on the buy side of the ledger, Berkshire Hathaway added to its investments in the aforementioned OXY and CVX. The conglomerate also increased its holdings in Celanese (THIS (opens in a new tab)), World Paramount (FOR (opens in a new tab)) and HR (HR (opens in a new tab)), also known as restoration hardware.
On the book sales side, we already knew from a filing last week that Warren Buffett has sold Berkshire Hathaway’s 56% stake in American bank (USB (opens in a new tab)), but another bank in the portfolio was also affected. Buffett reduces exposure to custodian bank Bank of New York Mellon (BK (opens in a new tab)) by 14% in Q3.
Other moves included parings of Berkshire Hathaway’s stakes in General Engines (GM (opens in a new tab)), ActivisionBlizzard (ATVI (opens in a new tab)) and Hooks (KR (opens in a new tab)). Finally, Berkshire Hathaway sold its entire position in the real estate investment trust Store capital (BIG (opens in a new tab)), losing the rest of its 6.9 million shares.
The big takeaway for people following Warren Buffett’s stock is TSM’s stake. It’s bold, a bit splashy, and kind of a surprise. With shares down about 40% year-to-date, it looks like Buffett — or one of his lieutenants — has found TSM to be trading at an irresistible price.
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