While I don’t own any shares of Berkshire Hathaway (although that could change), I still like to keep up with what moves Warren Buffett is making. This is especially true during the crazy first quarter of 2020. Buffett didn’t scoop up a bunch of good deals this quarter, in fact he did a lot of selling. In this post I summarize the changes in Buffett’s portfolio as described in Berkshire Hathaway’s 13F filing.
Bye Bye Airlines
The big news this quarter didn’t come from Berkshires 13F, but from the annual shareholders meeting: Buffett sold out all of his airline. Berkshire owned about 10% of each of the top 4 airlines. This includes Delta (DAL), Southwest (LUV), American (AAL), and United (UAL). During the shareholders meeting, Buffett mentioned he paid $7-8B on the investment, with the idea he would average about $1B of earnings a year.
Buffett was keen to mention that the airlines are managed well, and his decision to sell was no fault of the CEOs of the companies. The airline industry is very cyclical, which Warren understood, but he did not underwrite the economy being completely shut down. Going forward, these companies will probably take over $10B in debt, plus issue equity. Additionally, the airlines are going to have way more planes than demand for the foreseeable future. Despite the bailouts from the government, there is no indication the airlines are in the clear. Given these extraordinary circumstances, Buffett did not trim his position, but completely sold out.
A humorous point Buffett made during the shareholders meeting was that it took him months to build these large positions. However, when it came to selling, he found plenty of buyers. It is most likely folks from Robinhood.
Surprise Goldman Sachs Selling
The other major position reduction in Berkshire’s 13F is the reduction of the Goldman Sachs position by 84%. This investment was a remnant of the 2008 financial crisis, where Buffett bought preferred stock that was later converted into common shares. So far, there is no indication why Warren dramatically reduced his stake in GS. One theory is that they are venturing into online banking, so perhaps Buffett thinks they will be distracted and lose share of the investment banking business. Another potential reason is that Buffett sees Goldman as a risky operation during the COVID crisis. Or it could be as simple as this a legacy position, and Warren wants to shore up his already high cash reserves. Whatever the case, hopefully Buffett sheds some light on this sometime soon.
Small Trimmings
The rest of the Q1 Berkshire 13F shows minor position changes. Berkshire’s main purchase of the quarter was increasing its stake in PNC bank by 6%. PNC however, only makes up 0.5% of Berkshire’s portfolio so this purchase is peanuts.
Next, Berkshire exited its positions in Travelers (TRV) insurance and Phillips 66 (PSX) oil refiner. Both of these companies represented a small part of Berkshire’s portfolio at the start of the quarter, so the complete selling of shares is not very impactful. It appears Travelers shares started to be sold in Q4 2019. PSX was a much larger share of the portfolio, and has been consistently sold off since Q1 2018.
Finally, about a dozen positions were trimmed by a few percent, as seen in the table below. These companies make up a rather small part of the Berkshire portfolio. Most likely these stocks were bought, and trimmed by Todd Combs and Ted Weschler, rather than Buffett. These two manage small portfolios within Berkshire, and are more active than Buffett who typically only makes big acquisitions. I would be curious what is the rationale for selling small slivers of these companies, but there is probably not much to it.
| Ticker | Name | Activity |
| GM | General Motors | Reduce 0.43% |
| SU | Suncor Energy | Reduce 0.47% |
| AMZN | Amazon | Reduce 0.74% |
| LSXMK | Liberty SiriusXM | Reduce 0.77% |
| AXTA | Axalta Coating Systems | Reduce 0.80% |
| BIIB | Biogen | Reduce 0.84% |
| VRSN | Verisign | Reduce 1.06% |
| TEVA | Teva Pharmaceutical | Reduce 1.06% |
| DVA | DaVita Healthcare | Reduce 1.22% |
| LBTYA | Liberty Global | Reduce 2.43% |
| SIRI | Sirius XM Holdings | Reduce 2.83% |
| JPM | JPMorgan Chase & Co | Reduce 3.03% |
| LILA | Liberty LILAC Group | Reduce 3.10% |
| SYF | Synchrony Financial | Reduce 3.24% |
Conclusion
The first quarter of 2020 went by in a flurry, which makes looking at the Berkshire 13F so interesting. So far in Q2, the market has rallied on the belief the economy will quickly bounce back from the COVID crisis. It would seem that Berkshire’s Q2 13F will be pretty boring, just reporting the airline sales that were mentioned in the annual meeting. Perhaps the market will sell off again later this year, allowing us to pore over Buffett’s portfolio moves, and hoping he lands a big acquisition.
A good website to track super-investor portfolios is Dataroma.
To see my portfolio action in the first quarter of this year, check out:
My Investing Past, Present, Future