A week ago, investors were looking forward to the release of Berkshire Hathaway's (BRK.B -0.68%) (BRK.A -0.28%) latest 13F filing with the Securities and Exchange Commission. The quarterly report reveals changes to the company's stock portfolio, giving investors insight into what famed investor and Berkshire CEO Warren Buffett has been buying and selling recently.
Investors were particularly eager to see Berkshire's latest 13F filing because it covers a period in which stocks crashed. The overall market is still down more than 15% from its all-time high earlier this year. Berkshire's stock purchases during the period, therefore, could potentially reveal great buying opportunities for investors while the market is still down sharply.
However, it turns out there weren't any meaningful purchases during the quarter other than the one stock the company had already revealed that it spent nearly $1.6 billion on: its own Berkshire Hathaway stock.
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Warren Buffett's top buy
From the company's May 2 quarterly earnings release, investors already knew that Berkshire was a net buyer of stocks during Q1. But its total purchases (excluding buybacks of its own stock) exceeded sales of stocks during the quarter by only $1.8 billion. This suggested that the company's share repurchases during the period of about $1.6 billion likely was the biggest single stock purchase Berkshire made during the period -- and Friday's 13F filing showed this to be true.
Berkshire's notable buys during the quarter consisted of purchases that increased the company's holdings of two airline stocks and a slight addition to its PNC Financial Services Group (PNC 0.29%) stake. Thanks to some timely commentary from Buffett during the company's recent annual shareholder meeting, we know that Berkshire ended up cashing out of its entire stake in all four major airlines after the first quarter ended. So airlines clearly aren't a favorite pick for Buffett right now. Furthermore, Berkshire's addition to its PNC stake was small compared to its $1.6 billion buyback.
Q1 wasn't the only period Buffett was betting big on Berkshire stock. In Q4, the company spent $2.2 billion buying back its own stock -- more than it spent on all of its other stock purchases combined during the period.
Buffett apparently thinks Berkshire stock is the best deal in the market right now.
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The stock is an even better buy right now
What's particularly notable is that shares of Berkshire are trading at a significant discount compared to the average prices Buffett was purchasing them at in Q1. Most of Berkshire's purchases of its own stock in Q1 occurred at prices above $200. Today, shares are trading at about $170.
Further highlighting the stock's cheap price today, Berkshire's price-to-book ratio of 1.1 hasn't been this low since 2012.
Sure, much of Berkshire's record $137 billion cash balance may be purposely sitting on the sidelines to provide a greater buffer for the company's massive insurance operations during these uncertain times. In addition, Buffett is likely keeping dry powder for a potential large, opportunistic acquisition. But there's no denying that Buffett's outsize bet on Berkshire's own stock relative to other stocks in both the fourth quarter of 2019 and the first quarter of 2020 suggests he thinks its shares are a good deal right now.
