I’m really starting to have a hard time keep up with Buffett these days. He has made more buys and sells than a day trader as of late.
Buffett added to the cash pile in the second quarter when Berkshire Hathaway disclosed that it sold large blocks of stock in Delta Air Lines and Southwest Airlines. He actually sold all his stake in the airlines.
Last month Buffett spent $4 billion to buy the natural gas transmission and storage assets of Dominion Energy. In late July Buffett bought shares in Bank Of America two different times in a span of one week. Berkshire now holds 1.02 billion BofA shares worth more than $25 billion, making it Berkshire’s second-largest equity holding behind Apple.
Buffett recently bought approximately 20.9 million shares of Barrick Gold, valuing the position at $563.5 million. I had no idea he made these other moves in recent months.
Berkshire Hathaway's Liberty SiriusXM stake increased 37% to 43.2 million shares worth nearly $1.5 billion. Meanwhile, his stake in Store Capital grew 31% to 24.4 million shares, and his Suncor Energy and Kroger positions increased by 28% and 15%, respectively.
However, none of these positions is big enough to rank them among Berkshire Hathaway's top 10 holdings, so these purchases aren't likely to have a huge impact on future performance. For perspective, Liberty Media comprised 0.74%, Store Capital comprised 0.29%, Suncor Energy comprised 0.16%, and Kroger comprised 0.37% of Berkshire Hathaway's portfolio exiting June.
Nevertheless, these buys reflect Buffett's penchant for hunting in the bargain bin for deals. Suncor Energy and Kroger are in the midst of turnarounds, and Store Capital's shares were recently beaten up because its business relies on leasing free-standing buildings to retailers, including furniture stores and movie theaters hard-hit by COVID-19 restrictions.
STORE Capital Corporation is one of highest dividend (3.50% forward yield) stocks in Buffett's portfolio. It's the only REIT currently held by Warren Buffett's Berkshire Hathaway (BRK.B). Buffett bought his stake back in 2017 and is in fact the second-largest shareholder in the company, after Vanguard.
Kroger has expanded its organic and natural food selections to better compete Whole Foods Market. And to their credit are investing in online grocery orders and grocery deliveries. In May of 2018, Kroger bought a 5% stake in British online retailer Ocado in exchange for an exclusive deal for its grocery service. It’s all part of Kroger’s three year initiative to increase digital sales, equip stores with pickup and delivery and compete with Amazon.
What was surprising is Buffett also got out of his also got out of his Occidental stake. The largest stake in Occidental was held by Icahn Capital, followed by Berkshire Hathaway with a $332.1 million position.
Carl fought tooth and nail with Occidental Petroleum over it pending purchase of Anadarko Petroleum because he knew the company overpaid for Anadarko and it could endanger Occidental’s future if oil prices sink. Recently due to the collapse in oil price, Occidental cut its dividend for the first time in 30 years to conserve cash to cover debt incurred during the acquisition of Anadarko.
Berkshire Hathaway had bought $10 billion in Occidental shares to help fund the company’s acquisition of Anadarko and continued to acquire more and more shares. Carl fought tooth and nail with Occidental Petroleum over it pending purchase of Anadarko Petroleum because he knew the company overpaid for Anadarko and it could endanger Occidental’s future if oil prices sink. Carl intuition came true as one of the quarterly dividend was paid out in shares because the company didn’t have the cash. Occidental eventually cut its dividend for the first time in 30 years to conserve cash to cover debt incurred during the acquisition of Anadarko.
However, one trade place a $500,000 bet that Occidental will move higher. The trader bought debt spread consisting of 8,000 and 12,000 call options with strike prices at $16 and $20 that expire in November making the breakeven around $16.60.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
