We're not at the end of 2017 quite yet, but it's safe to say that Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) has had a solid year. Warren Buffett's investment vehicle made a number of splashy, value-enhancing moves, and strengthened its already formidable portfolio, this year.
Of course, not every play Buffett and company made was a win, but for the most part Berkshire did very well. Here's a look at the more impressive highlights of its 2017.
Apples and banks and stores
In mid-2016, Berkshire revealed that it had accumulated a sizable stake in Apple. Buffett-watchers were still digesting the famously tech-averse financier's big dive into the sector when he struck again. At the top of this year, Berkshire disclosed that it had nearly tripled its stake in the tech giant.
That move was extraordinarily prescient. This year, Apple has delivered sets of quarterly results that have not only beaten analyst estimates but also established new records for key line items such as quarterly revenue and per-share earnings.
A very impressed market has traded Apple's stock up by 45% since the beginning of the year. This has nicely lifted the value of Berkshire's stake, which according to the company's latest regulatory filing stands at over 130 million shares.
In August, Berkshire pulled the trigger on what was arguably its best deal of 2017, exercising its right to buy a big stake in Bank of America's common stock.
"Big" is an understatement; the warrants Berkshire received as part of a 2011 deal with Bank of America gave it the right to acquire 700 million shares. That gives it almost 7% of the outstanding amount, making Buffett and his gang the monster bank's largest shareholder.
The Bank of America in post-financial crisis 2011 was in a much weaker state than the Bank of America this summer. The 200%-plus share-price improvement over that stretch of time reaped Berkshire an immediate $12 billion gross paper profit.
Elsewhere in the financial sector, Berkshire took on a nearly 17.5 million-share stake worth almost $520 million in Synchrony Financial, the leading provider of retail store credit card products. Many investors are skeptical about the future of retail; Buffett isn't one of them. So far, like many of his bets, this one is paying off. Since the purchase was made public, Synchrony's stock has risen by 12%.
A similar scenario is playing out with Store Capital, a real estate investment trust that specializes in retail sector sale-leasebacks, in which a retailer sells its property to Store Capital, which then leases it back to the retailer. Buffett's faith in retail is paying off in this instance, too; Store Capital's stock is up by 9% since Berkshire's purchase was revealed.
On the divestment side of the equation, it came to light in August that Berkshire had bailed out of longtime holding General Electric. That was one of the company's better sells, as GE's stock price has eroded by 21% from the time Berkshire's sell-off became known.
Good outweighs bad
As mentioned, there were a few clinkers for Berkshire in 2017.
The company suffered a rare setback when its bid to take over privately held utility Oncor Electric Delivery lost out to a richer offer from natural gas utility holding concern Sempra Energy. And earlier in the year Berkshire committed $15 billion to one of its portfolio holdings, Kraft Heinz, to buy European consumer-goods giant Unilever. The target company unceremoniously rejected that bid.
On the whole, though, Berkshire's moves have been smart and beneficial. The proof is in the assets -- at the end of the company's Q4 2016, the total market value of its equity portfolio was $129 billion. In the latest reported quarter, Q2 2017, that number had swelled to $162 billion -- a nearly 26% increase.
It's rare for any investment fund -- for that's what Berkshire essentially is -- to post such a gain over a mere two quarters. It's also extremely challenging for a company with a huge asset base to grow said base at a meaningful rate. Berkshire and Buffett continue to be outperformers, and by and large they can be proud of their performance this year.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Synchrony Financial and Unilever. The Motley Fool has a disclosure policy.