Warren Buffett is one of the most closely followed investors in the world, and for good reason. Since taking control of Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) in 1965, Buffett has led the company to return a compound annual growth rate of 19.8% for its shareholders. That's nearly twice the 10.2% total return produced by the S&P 500.
So, when Buffett buys or sells a stock, it can have a big effect on what the rest of the market does. One of the most important sources for learning what Buffett and his team have been buying and selling is the quarterly portfolio disclosure (form 13-F) required by the Securities and Exchange Commission. But investors perusing the filing won't find three of Buffett's biggest purchases from last quarter on it.
You'll have to go digging a little deeper to find them. Or you can simply keep reading.
Image source: The Motley Fool.
1. U.S. Treasury bills ($5.8 billion)
Buffett added about $5.8 billion in U.S. Treasury bills to the massive stockpile Berkshire holds, bringing the total to $133.4 billion. With an additional $34.2 billion in cash, Berkshire's cash and equivalents position has reached a record $167.6 billion.
While Buffett is bullish on the long-term outlook of the U.S. stock market, he doesn't see a lot of great investment opportunities in today's market environment. That's led him to hold more cash. And he's much happier to do so at today's interest rates than he was just a couple of years ago, when interest rates were a "pittance," as he puts it in Berkshire's annual report.
Buffett favors short-term Treasury bills, which mature within one year, due to the liquidity they offer. "We continue to believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to short-term investments," Buffett writes in every quarterly report. Right now, however, he's getting the added bonus of higher yields on short-term Treasury bills versus longer-dated bonds, as markets expect interest rates to decline in the not-too-distant future.
2. Mystery stock (about $3.6 billion)
For the past two quarters, Berkshire's been buying shares of a stock for which it received an SEC exemption regarding its disclosure on form 13-F. Buffett and his team bought about $1.7 billion worth in the third quarter, and it may have added as much as $3.6 billion last quarter, based on data from the form 13-F and financial report.
While we don't know exactly what Buffett's buying, it appears to be a financial stock -- and a fairly big one at that, considering that Berkshire's already piled in over $5 billion. The reported cost basis for Berkshire's stock holdings of "banks, insurance and finance" equities increased $2.4 billion last quarter. Meanwhile, Buffett exited positions in finance companies StoneCo, Markel, and Globe Life.
The only stock purchases reported on form 13-F include Occidental, Chevron, and Sirius XM. Those purchases total about $3.8 billion based on average prices in the quarter. That leaves about $3.6 billion in the difference in the reported purchase of equity securities on Berkshire's statement of cash flows for the fourth quarter.
Investors will have to keep waiting to find out exactly what Buffett's buying. If Berkshire's stake in the company exceeds 5%, it'll have to report it publicly. Otherwise, Berkshire may be able to keep accumulating shares without telling anyone what it is.
3. Berkshire Hathaway ($2.1 billion)
Another large stock purchase you won't find on Berkshire's 13-F is the substantial amount of share repurchases made by Buffett in Q4. Yes, Berkshire Hathaway was one of Buffett's top stock purchases last quarter. In fact, his $9.2 billion in share repurchases for 2023 makes it his biggest stock purchase for the year.
Buffett's $2.1 billion in buybacks last quarter is an increase from Q3. Additionally, the $9.2 billion in buybacks for all of 2023 is an increase from 2022.
It's a good bet Buffett will continue to repurchase shares of Berkshire Hathaway for the foreseeable future. Berkshire is consistently generating more cash, and Buffett is finding it hard to deploy that cash faster than it comes in with good investments. While he could always buy more Treasuries while he waits for a good opportunity in the market, he points out that Berkshire already holds a cash position "far in excess of what conventional wisdom deems necessary."
In the meantime, buying back shares of Berkshire gives remaining shareholders a greater stake in everything Berkshire owns. And Buffett expects Berkshire as a whole to do "a bit better than the average American corporation." So, for now, it remains one of the best uses for cash at Buffett's disposal.
