Berkshire Hathaway and Warren Buffett spent much of the last quarter loading up on some of his best-performing stocks, such as Occidental Petroleum, Activision Blizzard, and McKesson, reports and article in Investor’s Business Daily. The move is in contrast to Buffett’s long-time advice of adding to existing stock positions when they’re cheaper.
Out of the 11 top-performing stocks in Berkshire Hathaway’s portfolio, Buffett added stakes to almost half of them, while adding to only 2 of the 11 bottom-performing stocks or dumping them altogether. The shift brings Buffett closer to growth investing rather than value investing, something he has long extolled. But even Buffett got dinged this year alongside most S&P 500 investors; only 11 out of the 49 U.S.-listed stocks in Berkshire’s portfolio are up, and its largest two holdings, Apple and Bank of America, are down 3% and 20% this year, respectively.
However, Occidental has had a banner year, given the high price of oil that fueled a 145% rally in its stock. Berkshire continues to gobble up shares; it now owns 20% of the energy company and has filed plans to possess up to half in the future. It could be a signal that Buffett believes “the green transition was way overplayed,” Cole Smead of Smead Capital Management told Investor’s Business Daily. Occidental isn’t the only energy company that Berkshire is going after; Chevron is now the 4th-largest holding in its portfolio and Buffett added 1.4% to his stake there in the second quarter. That makes the energy sector 10% of Berkshire’s total portfolio.
And it’s not just energy stocks that Buffett is adding to. He also took a bigger stake in the medical-supply company McKesson—adding 9% to own over 2% of the company—as well as adding 6% to his position in the video game maker Activision Blizzard. That company has a buyout by Microsoft pending; if approved, its stock would skyrocket from their current price of 80.27 to Microsoft’s 101.74 per share.
But Buffett isn’t adding to all of Berkshire Hathaway’s winners; he’s held on Coca-Cola, the company’s 3rd-largest holding which is up 10% this year as well as Kraft-Heinz, its 6th-largest position. As usual, the legendary investor is “being selective…tipping his hand a bit,” the article concludes.