Buffett

Warren Buffett Buys 6 Stocks in 3rd Quarter, Dumps Costco

Warren Buffett (Trades, Portfolio)’s $545.8 billion conglomerate, Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), disclosed its equity portfolio for the third quarter of 2020 on Monday.

With more than $140 billion to spend on stocks, the renowned guru and his two portfolio managers, Ted Weschler and Todd Combs, entered six new positions during the quarter, which were mainly biotech companies. In addition to the previously revealed stake in Snowflake Inc. (NYSE:SNOW), Berkshire invested in AbbVie Inc. (NYSE:ABBV), Merck & Co. Inc. (NYSE:MRK), Bristol-Myers Squibb Co. (NYSE:BMY), T-Mobile US Inc. (NASDAQ:TMUS) and Pfizer Inc. (NYSE:PFE).

As previously disclosed in July and August, the long-term investor also gradually added to the Bank of America Corp. (NYSE:BAC) position and trimmed the Wells Fargo & Co. (NYSE:WFC) stake by 42.1%. In September, the firm also revealed reductions to the Liberty Global PLC (LBTYA), Axalta Coating Systems Ltd. (AXTA) and DaVita Inc. (DVA) holdings as well as new positions Japanese companies Itochu Corp. (TSE:8001), Marubeni Corp. (TSE:8002), Mitsubishi Corp. (TSE:8058), Mitsui & Co. Ltd. (TSE:8031) and Sumitomo Corp. (TSE:8053).

Other notable trades for the quarter included reductions in the Apple Inc. (AAPL) and JPMorgan Chase & Co. (JPM) holdings and the divestment of long-held Costco Wholesale Corp. (COST).

Berkshire’s largest holdings, accounting for over half of the portfolio, are Apple, Bank of America, The Coca-Cola Co. (KO), American Express Co. (AXP) and Kraft Heinz Co. (KHC).

The guru’s $228.9 billion equity portfolio consisted of 49 stocks as of Sept. 30. A majority of the portfolio was invested in technology stocks at 49.93%, while the financial services sector has a weight of 27.10% and the consumer defensive space represents 13.29%.

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Apple

In his largest transaction of the quarter, Buffett sold 36.3 million shares of Apple, impacting the equity portfolio by -1.64%. The stock traded for an average price of $109.02 per share on a split-adjusted basis during the quarter.

After the 3.7% reduction, he now holds 944.3 million shares, which represent 47.78% of the equity portfolio. GuruFocus estimates Buffett has gained 223.55% on the investment since the first quarter of 2016.

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The Cupertino, California-based tech giant, which manufactures iPhones and Mac computers, has a $2.05 trillion market cap; its shares were trading around $120.3 on Monday with a price-earnings ratio of 36.89, a price-book ratio of 31.27 and a price-sales ratio of 7.7.

The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.

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Wells Fargo

Trimming the position by 46.38%, the Berkshire leader sold 10.17 million shares of Wells Fargo. The trade had an impact of -1.39% on the equity portfolio. Shares traded for an average price of $24.66 each during the quarter.

Buffett now holds 127.4 million shares, accounting for 1.31% of the equity portfolio. According to GuruFocus, he has gained an estimated 56.69% on the investment.

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The bank, which is headquartered in San Francisco, has a market cap of $102.95 billion; its shares were trading around $24.90 on Monday with a price-earnings ratio of 63.71, a price-book