The first quarter 13F filing from Warren Buffett’s Berkshire Hathaway showed the famed investor rejigging his portfolio with some outsized buys and sells. Despite being known as an investor who takes the long view, generally holding certain investments for decades, “The Oracle of Omaha,” as he is affectionately known, has become more active with his portfolio in recent years.
Savvy investors, whose own investment philosophy resonates with the ownership mentality of Warren Buffett’s, may be interested in replicating his portfolio for their long-term investments. Astute observes would also note that Berkshire went on a buying spree just as markets entered correction territory, expanding its investment book by a net $41 billion in the quarter, the highest since 2008.
Amongst the largest moves Buffett made in the first quarter was a $2.61 billion bet on Paramount, the large media conglomerate formed after the 2019 merger between CBS Corporation and Viacom. While the company has struggled lately, its stock was down 42% from its 52-week high, Buffett’s investment could be seen as a shrewd move in the streaming space as the sector has come under pressure lately.
Larger companies such as Disney and Netflix are down over 50% from their recent highs as there is growing concern around the profitability of so many streaming services in a high penetration market in the U.S. On a positive note, Paramount shares trade at a 11.8x forward P/E ratio, making the company relatively inexpensive from a multiples perspective. Shares were trading up 10% in the mid-morning session.
Another big buy during the quarter was a $2.9 billion stake in Citigroup Inc. after the company set a new strategic direction with C.E.O. Jane Fraser, who started in the position a year ago. Buffett has reoriented his investments in banks lately, exiting positions in more investment-banking oriented institutions such as JPMorgan and Gold Sachs, while sticking with more retail and commercial focused banks such as US Bancorp and Bank of America.
Berkshire also exited its investment in Wells Fargo. Citi shares have struggled lately, despite Fraser’s new strategy of focusing on high-return businesses such as wealth and management and treasury management starting to show some early signs of success. Citi shares are amongst the cheapest of U.S. based large banks, trading at a P/B of 0.6x, versus an average of 1.1x for peers. Citi also trades at the cheapest earnings multiple at 7.6x forward P/E, versus 9.5x for its comps group. Citibank shares were up more than 7% midday.
Buffett also increased his exposure to the O&G and Chemicals complex during the quarter. Buys included an expanded stake in Occidental Petroleum, Chevron, and Celanese. Other buys included a larger holding in Acitivision Blizzard, as a merger arbitrage play between the current trading price of the company in the market and the acquisition price that Microsoft agreed to earlier in the year.
Berkshire also boosted its stake in General Motors, McKesson, and Restoration Hardware. Sells included a near exit in the company’s position in Verizon Communications, and an exit in drug makers AbbVie and Bristol-Myers Squibb.
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