Berkshire Hathaway (BRK.A -0.87%) (BRK.B -0.79%), the conglomerate run by legendary investor Warren Buffett, was a net buyer of stocks in the second quarter of the year, which started April 1 and ended June 30. But Berkshire also sold $2.3 billion worth of stocks in what was a fairly uneventful quarter for the conglomerate.
The sales included eliminating two positions and trimming four others. Here are the six stocks Berkshire sold in the second quarter.
In the fourth quarter of 2020, Berkshire revealed a new $8.6 billion stake in the large U.S. telecommunications company Verizon Communications (VZ -0.89%). But in the first quarter of 2022, Berkshire trimmed nearly its entire stake in the company, before selling the remaining bits in the second quarter.
Verizon traded at a low of $57 in the fourth quarter of 2020 when Berkshire bought it and hasn't traded that high this year. So Buffett likely lost a little bit on the investment. Verizon has not exactly had an easy year so far and cut its full-year forecast recently. The company has also seen competition intensify and has lost market share.
2. General Motors
Berkshire trimmed its position in General Motors (GM 2.61%), selling nearly 9.2 million shares in the second quarter. Buffett and Berkshire first invested in GM back in 2012. After the sale, Berkshire still owns 52.8 million shares, which are valued at roughly $2.08 billion, representing a 3.6% stake in the company.
GM has struggled recently as supply chain issues have hurt earnings. But consumers are still buying its vehicles at a rapid clip, and the company thinks it can double revenue by 2030. So the stock still looks to have a good long-term outlook once near-term supply issues clear.
3. STORE Capital
In one of the bigger sales in the quarter, Berkshire cut its position in the real estate investment trust (REIT) STORE Capital (STOR) by more than half. It sold more than 7.8 million shares and owns just under 7 million shares now.
I was a little surprised to see this sale because STORE Capital has generally been a pretty successful REIT and has a healthy annual dividend yield of about 5.4%, and Buffett loves passive income.
But the triple-net-lease, single-tenant operator still hasn't rebounded to levels it traded at before the pandemic, and perhaps Buffett is worried about real estate right now.
Berkshire sold a little more than 5.5 million shares of the grocery chain Kroger (KR 0.76%), a position the company first entered in the fourth quarter of 2019. Since then, the stock has performed well, rising from the mid to high $20s to more than $49 now. Berkshire still owns more than 52.4 million shares, currently valued at $2.6 billion, giving it a 7.3% stake in the company.
Grocery businesses can be good to own during times of rising inflation because they can pass the higher cost of food on to customers. During a recession, Kroger is also a good stock because people won't stop buying food. Buffett and Berkshire might just be locking in some gains right now.
5. Royalty Pharma
Berkshire sold its remaining 1.5 million shares in the drug royalty company Royalty Pharma (RPRX 3.07%). Berkshire first invested $475 million in it in the third quarter of 2021 but then begin trimming that stake just one quarter later until finally eliminating it in the second quarter of this year.
Royalty Pharma made up only a small piece of Berkshire's massive equities portfolio, and it doesn't look like the company lost any money on the investment. The stock has also soundly beat the market this year and is up nearly 11% in 2022.
6. U.S. Bancorp
Buffett and Berkshire keep confusing me with the continued trimming of the large regional lender U.S. Bancorp (USB 0.49%). It has reduced its position in the bank several times in recent years but still holds a big stake. In the second quarter, Berkshire sold 6.6 million shares but still owns just under 120 million shares, currently valued at about $5.9 billion, or 8% of the company.
Buffett and Berkshire have gotten a lot more selective with bank holdings since the pandemic but had seemingly picked U.S. Bancorp as the regional bank of choice. It is a top performer in the banking industry and has been able to generate strong, consistent returns for years, so perhaps Berkshire is just right-sizing its position. But the constant trimming has my attention at this point, so I'll keep an eye on this one.