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3 Big Revelations from Warren Buffett's Latest Investing Moves

By Dan Caplinger - May 16, 2020 at 6:02AM

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Berkshire Hathaway's quarterly portfolio holdings provide some interesting color, even though we already knew about some of its CEO's subsequent decisions.

The coronavirus bear market has shaken investors to the core, and in times of trouble, many of them turn to legendary investor Warren Buffett for guidance and support. The CEO of Berkshire Hathaway (BRK.A 1.35%) (BRK.B 1.26%) always has plenty to say about the investing climate, and every three months, investors get a chance to see what the insurance giant has done with its own portfolio.

On May 15, Berkshire revealed some of its recent portfolio moves in a filing with the Securities and Exchange Commission. In several cases, the information the filing contained wasn't actually the most up-to-date, because it represents a snapshot of Berkshire's holdings as of March 31. Nevertheless, there were three important pieces of information that investors gleaned from Buffett's latest moves.

1. Berkshire had actually added to some of its airline positions -- right before he sold out

Thanks to Buffett's comments at the annual shareholder meeting, we already knew that Berkshire had sold off its entire position in the four major U.S. airlines. Required filings in early April showed that Berkshire had sold positions in Delta Air Lines (DAL 0.97%) and Southwest Airlines (LUV 0.58%), bringing both of them below the 10% mark at which more immediate disclosure is required. Asked for clarification, Buffett revealed that the sales weren't just motivated by the common thread of keeping positions below 10%. They represented a change of view, with the Berkshire CEO saying, "It turned out I was wrong about the business." Later filings revealed that Berkshire sold off its stakes in United Airlines Holdings (UAL 1.08%) and American Airlines Group (AAL 1.11%) as well.

Yet as of March 31, Buffett's holdings of Delta were actually slightly larger than they'd been at the end of 2019. A modest increase in United also showed up, with small declines for Southwest and American. In light of the abrupt shift that came just days later, it's interesting to see the positioning among airline stocks that took place during the first quarter.

2. These two stocks got the Buffett boot, but a third was a bigger surprise

Buffett sold out of two positions during the first quarter. Insurance giant Travelers (TRV 0.79%) and energy company Phillips 66 (PSX 1.32%) were eliminated entirely from Berkshire's holdings in the first quarter.

Green lawn in front of big building complex, with sign reading Phillips 66 Research Center.

Phillips 66 got eliminated from Berkshire's holdings in the first quarter. Image source: Phillips 66.

Neither move came as a really big surprise. Berkshire reduced its position in Travelers by almost 95% at the end of 2019, and Phillips 66 had seen an even larger-percentage reduction as of Dec. 31. These transactions simply got what had become insignificant positions off the books entirely.

More notable was the further reduction in Berkshire's position in Goldman Sachs (GS -0.25%). After going from 18.4 million shares in September 2019 to 12 million shares three months later, Berkshire reported owning only 1.9 million Goldman shares as of March 31. That's a nice payday from Buffett's opportunistic purchase back in the financial crisis, but it's interesting to see the big sale when even out-of-favor rival Wells Fargo managed to escape any reduction among Berkshire's holdings.

3. No huge buys

Some investors had hoped to see Buffett buying big during the coronavirus bear market, but the March 31 report confirmed Berkshire's conservative positioning. The filing revealed an added position in PNC Financial Services Group (PNC 0.64%), boosting its holdings by more than 500,000 shares to roughly 9.2 million. Apart from that, changes were insignificant and likely meaningless.

What's next for Berkshire?

We only get a sneak peek at Warren Buffett and his investment decisions once every three months, and the latest filing leaves more questions unanswered than it answers. What's becoming increasingly clear is that no matter how much confidence the Berkshire CEO has in long-term prospects for the stock market, his primary concern right now is ensuring that the insurance giant has the capital it needs to handle whatever happens from here forward in the coronavirus crisis.

Dan Caplinger owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Delta Air Lines and Southwest Airlines and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Travelers Companies, Inc. Stock Quote
The Travelers Companies, Inc.
$173.52 (0.79%) $1.36
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$354.97 (-0.25%) $0.88
Phillips 66 Stock Quote
Phillips 66
$89.36 (1.32%) $1.17
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$461,300.00 (1.35%) $6,130.00
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$306.65 (1.26%) $3.83
The PNC Financial Services Group, Inc. Stock Quote
The PNC Financial Services Group, Inc.
$175.04 (0.64%) $1.11
Southwest Airlines Co. Stock Quote
Southwest Airlines Co.
$39.87 (0.58%) $0.23
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
$40.29 (1.08%) $0.43
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
$35.34 (0.97%) $0.34
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$15.50 (1.11%) $0.17

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