Warren Buffett, the head of Berkshire Hathaway, is renowned for his exceptional investment tactics. For over sixty years, he has consistently surpassed the S&P 500 index. Since taking the CEO role, Buffett has managed an extraordinary aggregate return of approximately 5,600,000% in his company’s Class A shares.
This extraordinary performance has sparked immense interest among investors regarding his investment choices. Nevertheless, Buffett maintains a significant secret from Wall Street and his followers. He is not required to disclose it until mid-February.
Occasionally, Buffett secretly acquires substantial stakes in publicly traded companies. Berkshire Hathaway is obligated to submit quarterly 13F reports to the Securities and Exchange Commission (SEC), which shed light on the company’s investment dealings. However, in three instances since the onset of this decade, Buffett has sought and received confidential treatment for these 13Fs.
This confidentiality allows Berkshire Hathaway to amass its stake in a firm without triggering a rush from other investors that could inflate the stock price. In 2020, Berkshire had two positions that were kept confidential and were later disclosed to be Chevron and Verizon Communications. The third instance occurred between July 1, 2023, and May 15, 2024, when Buffett took a significant position in Chubb, a property and casualty insurer.
Buffett’s secrets don’t exclusively pertain to stock purchases.
Buffett’s divestment reduces Bank stake
On July 17, he started reducing Berkshire’s ownership in Bank of America.
In the past three months, Buffett has overseen the divestment of over 257 million shares of Bank of America, amounting to a market value exceeding $10 billion. The final selling round on Oct. 10 decreased Berkshire Hathaway’s stake in Bank of America to 9.99%.
With the company now beneath the Form 4 filing requirement, Buffett is no longer obligated to disclose any further selling activity within a few days. Investors will remain unaware if Buffett continues to sell shares of Bank of America from Oct. 11 through Dec. 31 until Berkshire Hathaway submits its 13F report on Feb. 14, 2025. The more pressing issue for investors is discerning the reason behind Buffett’s consistent status as a net seller of equities.
Throughout the last seven quarters, Berkshire has divested $131.6 billion more in stocks than it has acquired. Buffett’s choice to raise Berkshire Hathaway’s cash reserves to an unprecedented high of $276.9 billion indicates that he perceives minimal value in today’s market. This could serve as a concerning indicator for investors, as the current market ranks among the most expensive globally.
As investors keenly anticipate the disclosure of Buffett’s secretive trades come mid-February, they continue to observe and replicate his strategic choices, aspiring to mirror his stock market success.
