The conglomerate snapped up a $4.1 billion stake in Chevron (NYSE: CVX), $8.6 billion in Verizon (NYSE: VZ), and $499 million in insurance brokerage March & McLennan (NYSE: MMC). The three wagers had been granted confidential status and not revealed in a third-quarter regulatory filing.
Berkshire also trimmed its stake in Apple (NASDAQ: AAPL), leaving it with a holding valued at around $120 billion by the end of 2020. Apple remains Berkshire’s largest single-stock holding.
Buffett and his investment deputies—Todd Combs and Ted Weschler—have reshaped the Berkshire portfolio over the last year as the COVID-19 pandemic struck the U.S. and upended the market.
Berkshire had been heavily invested in the banking sector, which has done well amid the pandemic but is exposed to consumer finances and commercial real estate – both of which have been highly impacted during the coronavirus crisis. The conglomerate has lightened up on some lenders, while maintaining its bets on firms including Bank of America (NYSE: BAC).
The new purchases of Chevron and Verizon are in keeping with Buffett’s value orientation. Verizon trades for around 10 times estimated 2021 earnings and yields 4.6%, while Chevron yields near 5.5%. And one trader says the bets are indicative of the difficulties Buffett is having putting his massive cash pile to work.
“It speaks to the challenge Buffett has right now in deploying capital,” said Quint Tatro, president of Joule Financial. “It’s such a massive amount that he has to deploy, so he has to really find these big stable names. …They’re not the typical American franchise buys you would see him make.”
Between the two, Tatro says Chevron is the more attractive play now.
“This is a major integrated oil name, one of the best balance sheet-type names, 25% debt to equity, which is really, really good in that space,” Tatro said. “Not his typical type of names, but we would probably faro the Chevron over the Verizon.”