Berkshire Hathaway (BRK) 2021: Buffett's buys and sells

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 :point_down:

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 Apple 15,083 43 163 283%
2017 Apple 14,214 34 163 384%
2018 Bank of America 6,643 30 41 35%
2018 Bank of New York Mellon 1,630 52 51 (3%)
2018 Goldman Sachs 1,726 233 330 41%
2014 IBM 1,476 167 119 (29%)
2010 J&J 1,025 62 169 173%
2016 Phillips 66 1,484 77 84 9%
2015 Phillips 66 3,697 106 84 (21%)
2018 US Bancorp 2,205 52 55 7%
2012 Wells Fargo 1,820 32 49 51%
2011 Wells Fargo 1,071 26 49 87%
Average 83%

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.

Maynard