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Key takeaways
- The American conglomerate Berkshire Hathaway has invested a further 17 billion dollars (14.7 billion euros) in Alphabet.
- The portfolio changes include renewed investments in aviation and retail.
The American conglomerate Berkshire Hathaway significantly expanded its position in Alphabet, Google’s parent company, in the second quarter by investing a further 17 billion dollars (14.7 billion euros). With around 106 million class A and C shares now in its possession, the parent company of Google has grown into the third-largest position in the company’s equity portfolio, with a value of roughly 36.6 billion dollars (31.6 billion euros). This position now exceeds that of Coca-Cola, although it still trails major stakes such as American Express and Apple. A large part of this purchase, around 10 billion dollars (8.6 billion euros), took place through a private placement, while the remaining 7 billion dollars (6 billion euros) probably came from purchases on the open market.
Diversification into aviation and retail
Other notable increases in Berkshire’s portfolio include a 44 per cent rise in Delta Air Lines, bringing that stake to 5.1 billion dollars (4.4 billion euros). This marks a return to the aviation sector for Warren Buffett, who conspicuously shed his airline holdings during the 2020 pandemic and has in the past voiced scepticism about the sector’s profitability. In addition, Berkshire expanded its investment in homebuilder Lennar by 280 million dollars (242 million euros) and more than doubled its relatively small position in Macy’s.
Pullback from financial institutions
By contrast, the company continued to offload its holdings in the financial sector. It cut its exposure to Capital One by more than half and trimmed its stake in Ally Financial. The largest reduction in terms of total value was a 5.9 per cent scaling back in Bank of America (BofA), which reduced the position by about 1.7 billion dollars (1.5 billion euros). In total, the stake in BofA has shrunk by 53 per cent over the past two years.
Market reaction and share performance
Market reactions reflected some of this scepticism, as Berkshire’s share price fell by more than 3 per cent this week. This decline occurred despite the fact that the company has, for the first time in two years, once again engaged in large-scale share buybacks. (ev)
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