The Company That Buffet Nearly $78 Billion Worth of Resources Invested In, Stands as His Almost Certain Stock Purchase for 2025 (Don't Be Mistaken, It's Not Apple!)
On Wall Street, Berkshire Hathaway (BRK.A 1.37%-, BRK.B 0.86%-) has its CEO Warren Buffett in a league of his own. Since taking charge in the mid-1960s, Buffett has seen a staggering increase of over 5,700,000% in Berkshire's Class A shares (BRK.A), turning Berkshire into one of just 10 publicly traded companies surpassing the $1 trillion market cap level.
Outpacing the benchmark S&P 500, it's hardly shocking that investors, both professional and retail, look forward to the filings displaying the stocks Buffett and his advisors, Todd Combs and Ted Weschler, have been buying and selling.
Frequently, these quarterly Form 13F filings with the Securities and Exchange Commission (SEC) help investors follow Buffett's footsteps. A 13F is a mandatory filing for institutional investors managing at least $100 million, detailing their buying and selling activity from the previous quarter. As of December 3, Berkshire Hathaway's portfolio sits at a hefty $292.7 billion.
While 13Fs offer invaluable data and insight, they only reveal part of the story. A massive stock, valued at approximately $78 billion, that Buffett has invested in since mid-2018, isn't included in Berkshire's 13Fs. However, this is the stock Buffett is most likely to invest in by 2025.
Buffett's portfolio is seeing some changes
In his annual letter to shareholders, Buffett touched upon eight companies being "indefinite" holdings. Many investors are likely aware of Coca-Cola and American Express, which have been part of Berkshire's portfolio since 1988 and 1991 respectively. Bewilderingly, Buffett's letter also mentioned Occidental Petroleum and its five Japanese trading houses.
Starting 2024, Apple (AAPL 1.88%) and Bank of America (BAC 1.82%) are not included as permanent holdings in Buffett's latest annual letter. Buffett's activity in both stocks suggests this.
Over the past year (ending September 30), Buffett has offloaded more than 615 million shares of Apple, marking a reduction of 67%. Buffett had invested over $30 billion into Apple since the first quarter of 2016. Buffett mentioned at the annual shareholder meeting in May that selling Apple at a profit takes advantage of the historically low corporate tax rate.
As for Bank of America, Buffett has divested more than 266 million shares of the bank since July 17, based on available data from Form 4 filings. With Berkshire holding less than 10% of BofA's outstanding shares, it's no longer required to notify investors via Form 4 whenever it sells shares.
In the past eight quarters, Berkshire Hathaway, led by Buffett, has collectively sold $166.2 billion more in stocks than it has purchased. This appears to be a clear indication to Wall Street that the stock market is overpriced, and finding value is becoming increasingly challenging with each passing quarter.
However, there's one stock Warren Buffett is almost certainly to buy in 2025, considering Berkshire Hathaway is currently sitting on an all-time record $325 billion in cash.
Buffett has invested about $78 billion into this unlisted stock since mid-2018
There are a few noteworthy value stocks in Berkshire Hathaway's portfolio, some of which Buffett and his team have recently added (e.g., Sirius XM Holdings). But the stock Buffett is most likely to invest in by 2025, which is not listed in Berkshire's 13Fs, is shares of his own company.
Before July 2018, Buffett had no way of deploying Berkshire's cash through buybacks. The guidelines for share buybacks required that Berkshire's stock trade at or below 120% of book value for buybacks to occur. Due to Berkshire's shares never trading below this threshold, Buffett found himself unable to buyback shares.
On July 17, 2018, Berkshire's board amended the buyback criteria to allow Buffett greater freedom to repurchase shares. With no ceiling or end date, buybacks could take place, as long as Berkshire had at least $30 billion in combined cash, cash equivalents, and U.S. Treasuries on its balance sheet, and Buffett believed his company's shares were undervalued. This criterion is intentionally vague to provide Buffett with the flexibility to buy back shares when he sees fit.
Since the criteria were amended, Buffett has been purchasing shares of his company's stock for 24 consecutive quarters. The total value of these buybacks is approximately $78 billion, surpassing the combined amount he's spent on Apple, Bank of America, and Occidental Petroleum.
It's noteworthy that the September closure marked the initial occurrence since the revamping of buyback norms where Warren Buffett failed to approve any share buybacks. This could be attributed to Berkshire's stock being exchanged at a 60% to 70% premium compared to its book value, a pricing level not seen for about 16 years. As a devoted value investor, Buffett chose to stay put.
Having a whopping $325.2 billion in Berkshire Hathaway's reserves should theoretically allow Buffett, the Oracle of Omaha, a bit more flexibility in his valuation analysis — particularly when it comes to his company's shares. Given that Buffett had been purchasing shares for 24 consecutive quarters before the most recent one, it appears reasonable to assume that Berkshire Hathaway's stock is a likely purchase for Buffett in at least some quarters (if not all) in 2025.
Investors often closely monitor the stock purchases and sales of Berkshire Hathaway, led by Warren Buffett, as they believe these moves can provide insight into potential investments. Given Buffett's history of investing in undervalued stocks, many are curious to see if he will buy more of his own company's shares, which he has been purchasing for over two years, investing around $78 billion since mid-2018.
As Buffett has a significant amount of money managed by Berkshire Hathaway, investing in stocks is a crucial part of his finance strategy. With Berkshire's portfolio worth over $292 billion and Buffett's history of successful investing, his decisions regarding where to invest Berkshire's money are closely watched by retail and professional investors alike.
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