A key part of Apple’s business
Arguably Buffett and Berkshire’s most notable move in the quarter was their investment in the world’s largest chip maker. T.Aiwan semiconductor manufacturing company (TSM -1.40%)also known as TSMC. Berkshire purchased approximately 60.06 million shares of the company, for an amount of $ 4.1 billion at the time of purchase. This equates to a stake of approximately 1.2% in the company.
TSMC is a powerhouse in its own right, but it is also a key supplier for Apple. The giant of consumer technology was TSMC’s largest customer in 2021 and last year accounted for a quarter of the company’s revenue. This year, that number is expected to be even higher, although TSMC foresees more room for growth in other sectors such as the auto market.
Apple is also by far the largest holding in Berkshire, making up about 40% of a equity portfolio worth over $ 300 billion. It is quite common for Berkshire to find stock through existing companies in which it manages or owns stock. For example, the company credits its investment in the cloud storage company Snowflake to the fact that his insurance brand Geico had long been one of Snowflake’s customers. We know Buffett and Berkshire really love Apple, so this investment makes perfect sense.
Seven more purchases and six sales
In addition to TSMC, Berkshire also bought shares in seven other companies, two of which were new additions to the portfolio.
The first is Louisiana-Pacific Corp. (LPX -1.80%), supplier of building materials. The stock was up more than 10% in after-hour trading. Many home builders have struggled to source materials due to supply chain problems and are also facing higher construction costs. Buying approximately 5.8 million shares for more than $ 300 million can be a way to invest in the growth of the industry.
Berkshire also bought a very small stake – $ 12.8 million – in the investment bank Jefferies financial group (JEF -1.76%), which was up 5% in after-hour trading. Investment banks have struggled this year due to a slowdown in equity and debt underwriting. But Jefferies believes it has gained market share recently and is trading at a rather low valuation right now, right around tangible book value.
Other purchases in the quarter concerned existing positions. Unsurprisingly, Berkshire has continued to bet on US oil through its purchases of Western oil (BONES -1.41%) And Chevron (CVX 0.05%) in the quarter. Berkshire increased its stake in Occidental by approximately 22.6%.
Berkshire has also significantly increased its stake in the large media company Supreme Global (PARA -1.70%) by over 16% in the quarter. Finally, Berkshire increased its holdings in the home furnishing company RH (RH -2.10%) and chemical company celanese (THERE IS -5.03%) approximately 8.8% and 6% respectively.
In addition to the purchase, Berkshire sold six stocks in the quarter, including its entire position in the real estate investment fund SHOP Capital (STOR), which shouldn’t come as a surprise considering the company is in the process of being acquired. Berkshire has also significantly reduced its position in the long-standing holding American bank (USB -2.38%) and it actually continued to cut that position after the third quarter, according to recent documents.
Other more substantial cuts made by Berkshire in the quarter are those Bank of New York Mellon (BK -2.11%)which reduced by about 14%, and the video game company Activision Blizzard (ATVI -0.24%), about 12% of its current position. Berkshire has made minor changes to the properties Kroger (Kr -0.60%) And General Motors (GM -2.89%).
The result of all the activity
Berkshire certainly made some moves in the third quarter, but less than it would seem. The most important move was the acquisition of a stake in TSMC and the sale of a major position in US Bancorp. The sale of STORE Capital made sense and the purchase of more oil stocks was a recurring theme this year.
Although Berkshire has made some notable cuts, Buffett and the rest of the company could simply scale back their portfolios to prepare for a tougher economy in 2023. However, it will be worth monitoring whether Berkshire will eventually move to fully exit any one. of equity investments. it sold, like US Bancorp, which would certainly be possible.
Bram Berkowitz has no position in any of the titles mentioned. The Motley Fool has positions and recommends Activision Blizzard, Apple, Berkshire Hathaway (B shares), Jefferies Financial Group Inc., STORE Capital, Snowflake Inc. and Taiwan Semiconductor Manufacturing. The Motley Fool recommends RH and recommends the following options: long January 2023 $ 200 call on Berkshire Hathaway (B shares), long March 2023 $ 120 call on Apple, short January 2023 $ 200 put on Berkshire Hathaway (B shares), short January 2023 $ 265 call on Berkshire Hathaway (B shares) and short calls of $ 130 in March 2023 on Apple. The Motley Fool has a disclosure policy.