Warren Buffett’s 2021 annual letter was published the other day (https://berkshirehathaway.com/2021ar/2021ar.pdf). Always worth keeping an eye on what the ‘Oracle’ is up to. I focus on the common stocks that Berkshire Hathaway (BRK) owns, which amateurs such as us are able to buy.
This is how Buffett’s portfolio started 2021:
And this is how the portfolio finished 2021:
Not as much dabbling last year as there was during 2020
New companies appearing in the top 15 for 2021 are Mitsubishi and Mitsui, which have never appeared in Berkshire’s common-stock portfolio before. Buffett notes “several… are selections of Berkshire’s two long-time investment managers, Todd Combs and Ted Weschler.” Mitsubishi was bought at $26 and Mitsui was bought at $17, and the purchases could in theory have been made before 2021.
Top-ups were Itochu and Verizon. The portfolio increased Itochu by 10% at $30 and Verizon by 8% at $57.
Top-slices were Charter Communications (reduced by 27%), Chevron (reduced by 21%) and US Bancorp (reduced by 3%).
No changes were made to American Express, Apple, Bank of America, Bank of New York Mellon, BYD, Coca-Cola, General Motors and Moody’s.
From the 2020 portfolio, Abbvie and Merck have now disappeared.
Abbvie looks to have been top-sliced by at least 36%. Had the holding been untouched during 2021, its value would have been c$3.5b and a top-15 position.
Not sure about Merck. Had this holding been untouched during 2021, its value would have been £2.2b and just outside the top 15.
Note that Apple now represents a mighty 46% of the entire common-stock portfolio!
But should we still take notice of Buffett’s buys? Earlier annual reports revealed the following $1b-plus Berkshire investments:
|Year||Company||Investment ($m)||Buy price ($)||Price now ($)||Gain|
|2020||Bank of America||2,071||24||41||68%|
|2018||Bank of America||6,643||30||41||35%|
|2018||Bank of New York Mellon||1,630||52||51||(3%)|
Had you bought at the same price as Buffett, you would have averaged an 83% gain (before dividends) if you had held on to today. Only the Apple purchases presently look very lucrative decisions.
As per 2020, the biggest ‘buy signal’ from Buffett’s 2021 letter related to Berkshire itself. Buffett said:
"During the past two years, we therefore repurchased 9% of the shares that were outstanding at yearend 2019 for a total cost of $51.7 billion. That expenditure left our continuing shareholders owning about 10% more of all Berkshire businesses, whether these are wholly-owned (such as BNSF and GEICO) or partly-owned (such as Coca-Cola and Moody’s).
I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value. We don’t want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire."
$24.7b was spent during 2020 effectively buying c81k BRK.A stock at $304k, while $27b was spent during 2021 effectively buying c66k BRK.A stock at $409k. And Buffett is still buying:
"As of February 23, 2022, since yearend we repurchased additional shares at a cost of $1.2 billion. Our appetite remains large but will always remain price-dependent. "
BRK.A price is now $488k.