Berkshire Hathaway, the investment holding company of stock market legend Warren Buffett, recently disclosed their holdings in the third quarter of 2023 through the 13F form. This revealed more sales than purchases and a record-high cash position. However, Buffett is apparently secretly working on building a new stock position and has requested the SEC to keep one or more investments undisclosed.
Stock market legend Warren Buffett has repeatedly emphasized in recent years that it has been difficult for Berkshire Hathaway to find adequately valued and large enough companies suitable for investment. This is also reflected in the third-quarter data of the investment company. According to "Business Insider," Berkshire Hathaway only spent $1.7 billion on stock purchases in the third quarter while selling securities worth $7 billion. As a result, the company's cash balance increased from $147.4 billion in the previous quarter to a record high of $157.2 billion.
Warren Buffett and his holding company remained net sellers of stocks throughout the entire year 2023, while the situation was different in 2022. As reported by "Yahoo Finance", the so-called Oracle of Omaha justified this behavior by "eliminating remnants" of some old holdings. However, the renowned investor also made sales in some prominent positions. Buffett and Berkshire Vice Chairman Charlie Munger completely divested from stocks of Procter & Gamble, General Motors, UPS, Mondelez, and Johnson & Johnson in the third quarter. Other holdings, such as those in oil company Chevron or IT company HP, were significantly reduced. However, no existing positions were increased, and according to the publicly available 13F form, new stocks of SiriusXM, Atlanta Braves, and Liberty Media were added to the Berkshire portfolio.
Analyst Greggory Warren from financial company Morningstar interpreted Warren Buffett's behavior towards "Yahoo Finance" as a sign of patience. "Discipline has prevented Berkshire from making big mistakes. Their cash position is so high because they haven't made unwise decisions over time," he explained. Lee Munson from Portfolio Wealth, a wealth management firm, also said to the news portal, "The message is: be cautious. I believe he foresees problems for the next year." Munson said that Buffett currently simply doesn't see any great deals. However, that doesn't seem to be entirely true. Because apparently, Buffett has found a great deal in the past quarter, but he is not ready to share it with the public yet.
According to "Investing.com", Berkshire Hathaway has requested the US Securities and Exchange Commission (SEC) to keep one or more holdings undisclosed in the submission of the mandatory 13F form. "The manager has omitted one or more holdings in this public 13F form, for which confidential treatment has been requested from the U.S. Securities and Exchange Commission pursuant to Section 13(f) of the Exchange Act and Rule 24b-2," the agency said according to "Investing.com". This approach is not new for Warren Buffett. In 2020, he had already agreed to confidentiality with the SEC while building holdings in Chevron and Verizon.
"Barron's" assumes in the current case that Buffett began building the new position in the third quarter of 2023, but it is not yet complete. The secrecy of the new investment now serves to calmly conclude the stock purchases in the current quarter, without the stock price being driven up by imitators of Buffett. A disclosure of the currently secret Buffett bet is expected either with the next 13F Form for the fourth quarter of 2023 or earlier as part of a mandatory notification if Berkshire Hathaway exceeds the reporting threshold of five percent.
Buffett's secret trade hints towards a certain direction, although the company or companies involved are currently unknown and whether it is one or multiple companies. According to Barron's, indications from the 10-Q quarterly report form suggest that the cost basis of financial assets at Berkshire Hathaway increased by $1.2 billion in the third quarter, while decreasing in other stock groups. However, the 13F form reveals that the investment holding did not increase any existing positions in the financial sector. Therefore, the changes in the cost basis must be attributed to a new position in this sector, according to the news site.
A non-named analyst from the financial services provider Edward Jones stated to "Investing.com" that Warren Buffett is likely to have added a new financial stock to his portfolio. However, opinions diverge on which company it could be, although the selection is not as large considering the many financial stocks already in the Berkshire portfolio. While "Barron's" assumes that Berkshire is currently involved in a "financial company from the top 25 by market value," the Edward Jones analyst believes that smaller companies in the industry could also be considered. However, both expect the position to be built up to be worth up to four or five billion US dollars. The potential candidates - if it is only a single investment - according to "Barron's" are the US investment bank Morgan Stanley, the asset manager BlackRock, or the insurance company Chubb. On the other hand, the Edward Jones analyst mentioned the US investment bank Goldman Sachs, the financial services provider Charles Schwab, and the insurer AIG as possible options.
