Berkshire Hathaway’s (BRK/A, BRK/B) fourth-quarter 13F was filed after the market closed on Valentine’s Day, February 14. This regulatory filing gives us a quarterly opportunity to observe what Warren Buffett and his investment team of Todd Combs and Ted Weschler are doing within Berkshire’s publicly traded equity portfolio. Berkshire has a large stable of wholly-owned entities, but this report provides us with the details of the U.S. publicly traded stock portion of their investments. Berkshire’s fourth-quarter earnings report, containing Warren Buffett’s annual letter and information about the extensive portfolio of wholly-owned operating companies, is expected on Saturday, February 22.
Berkshire Hathaway’s Top Ten Holdings
Berkshire’s $267 billion investment portfolio consists of 38 companies, down two from last quarter. Berkshire was likely a net seller of publicly traded stocks during the quarter. The top five holdings, in order of the size of holding, are Apple (AAPL), American Express (AXP), Bank of America (BAC), Coca-Cola (KO), and Chevron (CVX). The top 5 holdings account for almost 71% of the total portfolio, down from 76% in the first quarter. The investment portfolio remains very concentrated, with nearly 90% of assets in the top ten holdings.
Berkshire Hathaway’s Portfolio By Sector
Notably, Berkshire stopped paring their Apple (AAPL) position in the fourth quarter. Before the sales in 2024, Apple stock comprised over 50% of its publicly traded portfolio, but it remains the most significant holding at around 28%. The Berkshire portfolio was overweight technology due to its massive Apple stake, but the selling in 2024 has taken technology to a slight underweight. Despite the trimming of Bank of America (BAC), Capital One Financial (COF), Citigroup (C), and Nu Holdings (NU), the financial sector is the most significant overweight in the portfolio at almost 40% of assets. Due to its top five holdings, plus Occidental Petroleum (OXY) and Kraft Heinz (KHC), the portfolio remains considerably overweight in consumer staples and energy relative to the S&P 500. Berkshire controls 28% of the outstanding shares in Occidental, which, combined with Chevron, leads to a significant energy sector overweight. A deeper analysis of the probable reasons behind the Occidental purchase can be found here. Berkshire has only one small holding in the industrial sector and no real estate companies or utilities. However, Berkshire’s wholly-owned entities include a large railroad, Burlington Northern Santa Fe, and multiple regulated utilities and pipelines.
Because the 13F does not include international stocks, Berkshire Hathaway initially announced the acquisition of about 5% of five Japanese trading companies at the end of August 2020. These holdings are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd., and Sumitomo Corp. Buffett revealed in April 2023 that Berkshire increased its stakes in these companies to 7.4%. Buffett indicated that these were intended to be long-term holdings, and Berkshire may still increase its stake to 9.9%.
Portfolio Changes
Berkshire added one new holding, Constellation Brands (STZ). At a value of over $1.2 billion and the nineteenth largest holding, it was a decent-sized addition to the portfolio, accounting for almost half a percent of assets. Constellation is best known for owning the rights to Corona and Modelo beers in the U.S., but it also owns some wine and spirits brands. Beer accounts for about 80% of their sales. In January, the company reported worse-than-expected quarterly earnings and lowered its outlook for the year. Potential tariffs on Mexico could negatively impact its Mexican beer earnings. In addition, there are fears that the GLP-1 diet drugs and a growing preference for cannabis could weigh on the long-term outlook of its alcohol brands. On the other hand, the stock is now selling for a multi-year low in valuation across several metrics.
Berkshire added to its positions in Domino’s Pizza (DPZ), Pool Corporation (POOL), Occidental Petroleum (OXY), Verisign (VRSN), and Sirius XM Holdings (SIRI).
Ulta Beauty (ULTA) was eliminated from the portfolio in the quarter after being trimmed last quarter. Notably, Ulta Beauty was newly added to the portfolio in the second quarter of 2024. Minor holdings in the Vanguard S&P 500 (VOO) and SPDR S&P 500 (SPY) exchange-traded funds (ETFs) were also jettisoned.
Within financials, Berkshire trimmed its Citigroup (C), Capital One Financial (COF), Bank of America (BAC), and NU Holdings (NU). Warren Buffett is regarded as one of the greatest bank stock investors ever. Hence, the continued reduction in exposure to the banking sector is notable, but almost 40% of the stock portfolio remains in financial companies.
Berkshire also reduced its positions in T-Mobile (TMUS), Charter Communications (CHTR), Liberty Media—Formula One (FWONK), and Louisiana-Pacific (LPX).
Portfolio Valuation Metrics
This analysis looks at the Berkshire portfolio across a host of measures, including 12-month forward estimated: price-to-earnings (P/E), price-to-sales (P/S), return-on-equity (ROE), enterprise value-to-earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), price-to-book (P/B), dividend yield, current debt-to-EBITDA, current free cash flow yield, current operating margin, and long-term earnings-per-share growth consensus estimates.
Overall, the Berkshire portfolio analysis reflects a cheaper price-to-earnings valuation than the S&P 500 while having superior profitability as measured by return on equity and operating margin with similar debt levels. The long-term (next 3 to 5 years) consensus earnings-per-share growth rate is expected to be lower than the S&P 500. Buffett’s preference for high-quality companies that generate significant cash flows is evident from the better profitability metrics combined with a superior free cash flow yield.
Summary
Berkshire was likely a net seller of stocks in its portfolio for the ninth quarter in a row, with an estimated net sales of about $5 billion in publicly traded stocks. The exact value of stock moves will be disclosed with Saturday’s earnings release. Between the continued stock sales and Berkshire’s massive stockpile of cash, Buffett seems unable to find enough attractive acquisition targets in his circle of competence and at a valuation he is willing to pay.
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