Berkshire Hathaway’s 2024 Fourth-Qtr 13F: Portfolio Analysis and Investors’ Reactions
Berkshire Hathaway’s fourth-quarter 2024 regulatory filing, filed after the market closed on Valentine’s Day in February 2024, provides a strategic insight into its U.S. publicly traded stock portfolio. The filing Highlights the company’s ongoing focus on diversifying its investments, reducing its concentration in select sectors, and maintaining a balance between exploitation and growth. With a report expected to be filed on Saturday, February 22, this regulation offers a preview of Berkshire’s activities during the trading day.
Buffett and his investment team, Todd Combs and Ted Weschler, have been actively managing their portfolio, recognizing significant holdings in companies such as Apple (AAPL), American Express (AXP), Bank of America (BAC), Coca-Cola (KO), and Chevron (CVX). These holdings have accounted for nearly 71% of the portfolio in the previous quarter, down from 76% a year ago. The portfolio remains highly concentrated, with over 90% of assets concentrated in the top ten holdings. This concentration is likely influencing Berkshire’s stock valuations and their exposure to the tech, financial, and consumer staples sectors.
Buffett’s expertise in valuing Berkshire’s portfolio, driven by its extensive holdings in technologies, including a massive Apple stake that has historically driven substantial revenue but laid the groundwork for younger investors to see the portfolio underweighting tech, Berkshire has seen its performance shift. Occidental Pipeline (OXY) and Occidental CORN (OCN) remain top holdings, with Occidental’s significant acquisition to scale into approximately 7.4% stake in 2023. Berkshire’s ownership of both oil and beverage brands has made Occidental a particularly significant holdings holder. However, this shift has caused Occidental’s stock to gain some positive value, further impacting its fundamental valuation.
The portfolio has also been slightly reduced due to a notable dollar deposit sale of 5% of five Japanese trading companies. These holdings include Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd., and Sumitomo Corp. Berkshire’s strategy of increasing stakes in these companies to a 9.9% combined position is designed to ensure a long-term growth trajectory. The sale of these holdings to Yamaha (YOSK) in rigid drives and a. Unlike to Platforms (LMBT), these controlled transactions are likely to reduce Berkshire’s exposure to what Berkshire perceives as unproductive industries.
Buffrey is increasingly optimistic about Berkshire’s ability to remain a profitable and sustainable investment, despite the volatile financial markets. Buffett’s preference for publicly held high-quality companies with strong cash flows positions him to target a wider range of industries, particularly those with strong sustainability and growth potential. For example, shares of Kansas City Steel (KO) and Other (OTHE) remain high in Berkshire’s portfolio, as they deliver consistent results and have demonstrated resilience during market downturns.
Buffetts’s valuations metric analysis, which includes return on equity (ROE), operating margin, and free cash flow yield, reveals that Berkshire is relatively valued within certain sectors. However, the 13F sold certain holdings, includingValued dividends, leading to lower buybacks. This could pose a price-off for some of these companies, potentiallyValued to align with the broader market. The report also highlights a significant shift from high dividend yield to lower dividend policies, reflecting scrutiny fromBuffett and institutional investors.
Despite these changes, Berkshire’s strong fundamentals and institutional ownership positions lie strong support, signaling potential for sustained stock performance. The strategic approach of benefiting from Berkshire’s ability to leverage its capital for growth while maintaining a prudent balance represents a sustainable model that can attract institutional and personnel support. With these factors guiding, Berkshire is poised to remain a resilient diversified equity portfolio in 2024.
