Berkshire Hathaway: Buy, Sell, or Hold?

Several months ago, I wrote an article discussing whether investors should plow some of their money into Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Spoiler alert: I concluded that Warren Buffett's investment vehicle was more than worthy of a buy.

Much has happened to the company's vaunted equity portfolio since then, however, and it looks different now than it did such a short time ago. So I think it's time for a reassessment -- is the Berkshire of late 2024 still as much of a buy as it was before all those portfolio changes?

Hanging out the "for sale" sign

The major stock moves in the portfolio involve divestment in Berkshire's monster Apple and Bank of America positions. At one point, more than half of the Berkshire equity portfolio was stuffed with Apple stock; following a series of big share sales in recent months, that proportion fell to 29%.

Berkshire amassed a huge stake in Bank of America following a 2011 deal in which Buffett agreed to inject it with $5 billion in return for a package of preferred shares and warrants. In mid-2017, Berkshire exercised the warrants, funding them from the sale of most of the preferred stock. By the end of that year alone, the resulting stake in Bank of America common shares was worth more than $20 billion -- quite an outsized return across that relatively thin stretch of time.

Yet even a finance industry aficionado such as Buffett didn't want to hang on to such a large position forever. Berkshire's Bank of America sell-offs this year have been aggressive; more than $10 billion worth of the lender's equity has flown from the company's hands since July, downsizing its share of the portfolio from 13% to 10%. Buffett is still doing very well with what remains -- that 10%-plus holding is worth a cool $31 billion these days.

Those sales helped Berkshire fund its latest -- and to many observers, most unexpected -- major investment move. It loaded up on U.S. Treasuries, with the frequently adventurous Buffett and his gang plowing tens of billions of dollars into these ultra-safe investments. Berkshire's most recent quarterly earnings report revealed that its pile of short-term Treasuries amounted to a hard-to-imagine $234.6 billion. By the way, that's well more than the U.S. Federal Reserve's stash of $195 billion.

With that, the company's cash and equivalents tally (basically, greenbacks plus extremely liquid securities) ballooned to $277 billion according to that earnings report. That's quite the dramatic increase from the previous end-quarter figure of $189 billion.

Other changes in Berkshire's portfolio are less Earth-shaking, and entirely in character for Buffett. The celebrated investor loves the concept of a moat, and he's got a pair in two new Berkshire positions: aerospace and medical device components supplier Heico, and Ulta Beauty, a cosmetics retailer that sets itself apart with its in-store salons.

Meanwhile, existing Berkshire holdings that got a boost in share count last quarter included unique media company Sirius XM Holdings, energy giant Occidental Petroleum, and an enterprise operating in a sector near, dear, and very familiar to Buffett and his colleagues: insurance mainstay Chubb.

Finally, we recently saw Berkshire fully exit its investments in troubled entertainment company Paramount Global and the far more popular stock of high-flying cloud data specialist Snowflake. Other sell-offs included chunks of its holdings in Capital One Financial and Occidental peer Chevron.

Cautious moves

Taking all these changes together, it seems Berkshire isn't as confident as it once was on the growth potential of stocks today. That would explain its recent thirst for Treasuries, one of the most conservative investments imaginable. Those new equity positions suggest a batten-down-the-hatches adherence to that economic moat philosophy, as do several of the add-ons of existing holdings (except for maybe Occidental, which could be more of a play on low valuations; Buffett is an ace bargain hunter).

The Apple and Bank of America sell-offs trim those positions to more reasonable levels, particularly with the former stock. It's a conservative move to reduce a stake to the point where it's far less dominant in the portfolio than it once was.

If anything, I think Berkshire's slimmed-down equity portfolio looks better than it did when I wrote the previous article. Apple is a fine company, but at its size, anchored as it is by a nearly 20-year-old product (the iPhone), it won't have an easy time posting meaningful growth numbers. Those other recent buys look both opportunistic and potentially quite rewarding, an admirable combination.

So given that Berkshire's current stock lineup is an improvement over the quarter-ago version, I'm still bullish on the company. It remains a definite buy to me.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Chevron, Snowflake, and Ulta Beauty. The Motley Fool recommends Heico and Occidental Petroleum. The Motley Fool has a disclosure policy.