What Buffett Is Buying, Selling -- November 17, 2019

Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

Note: I often make simple arithmetic errors, and factual and typographical errors. If this is important to you, go to the source.

This past week, Warren Buffett got a lot of attention with regard to Apple, Inc; Restoration Hardware; and, other SEC filings for Berkshire Hathaway.

Two stories of note. The first story:

• Warren Buffett's stake in Apple actually increased despite the fact he sold some AAPL shares. Data points:

• he sold about 751,000 AAPL shares
• his stake in Apple, Inc., increased to 5.6%
• the strange outcome was due to Apple buying back its own shares; outstanding shares have decreased
• In a 13F filing with the Securities and Exchange Commission late Thursday, Berkshire disclosed what amounts to a rebalancing of its Apple investment, as the number of shares it owned declined by 750,650 to 248,838,679 shares as of Sept. 30, 2019, from 249,589,329 shares as of June 30, 2019.
• However, because Apple’s shares outstanding declined to 4,443,265,000 from 4,519,180,000 shares, Berkshire’s ownership stake increased to 5.60% from 5.52%.
• And since Apple’s stock surged 13% during the quarter, the value of the stock owned by Berkshire increased by over $6 billion, to $55.73 billion as of Sept. 30, 2019, from $49.40 billion as of June 30, despite the lower share count.

The second story.

For Investor's Business Daily I thought this was a pretty poor article. The writer listed the top ten Berkshire Hathaway holdings by the number of shares held, not by the dollar value. The number of shares held is obviously irrelevant. The only thing relevant is the dollar value.

The writer uses the share price of September 30, 2019, when providing holdings by dollar value. That makes sense because we don't know what Buffett may have done with his holdings between September, 2019, and November 15, 2019.

In addition, the author did not note the companies that BRK owns outright, like the Burlington Northern railroad. The top ten listings were only equity holdings in publicly traded companies.

I have added the share value for each of the top ten (Friday, November 15, 2019, close, rounded)

• BofA: $33/share x 927.3 million shares = $30,600 million
• Coca-Cola: $53/share x 400 million shares = $21,200 million
• Wells Fargo: $54/share x 378.4 million shares = $20,434 million
• Kraft Heinz: $31/share x 325.6 million shares = $10,094 million
• Apple: $266/share x 248.8 million shares = $66,181 million
• American Express: $120/share x 151.6 million shares = $18,192 million
• Sirius XM: $7/share x 136.3 million shares = $7,770 million
• US Bankcorp: $59/share x 132.5 million shares = $7,818 million
• Bank of New York Mellon: $49/share x 80.9 million shares = $3,964 million
• General Motors: $37 x 72.3 million shares = $2,675 million

Doing the math as it is done above, does point out something else. Of the ten holdings, five of them are in the $10 - $30 million range; and, four of them are  below $10 million each in total value.

There is one outlier: AAPL, accounting for almost $70 million, twice that of BofA, #2.

Considering that based on number of shares, AAPL is only #5 of the top ten, but is an outlier in dollar value would suggest to some that AAPL is highly overvalued (though its P/E is only in the low 20s) or the other holdings are undervalued. Or perhaps everything is valued correctly, but AMEX and AAPL need to split their shares to bring them into the $40 - $60 share price enjoyed by most of the others.

Sirius seems to be an outlier for several reasons, but depending when he bought SIRI, Buffett may have done quite well.

Most interesting is this factoid. As of September 30, 2019, AAPL accounted for 26% of the total Berkshire Hathaway portfolio. I do not know if the the writer includes everything owned by BRK or just the equity in publicly traded companies

But, whatever. If AAPL accounts for 26% of his portfolio, equity in publicly held companies or overall, Jim Cramer might argue that this is not a well-diversified portfolio.

Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

Note: I often make simple arithmetic errors, and factual and typographical errors. If this is important to you, go to the source.