On May 16, North American time, Berkshire managed by Buffett submitted form 13F (form 13F) to the CSRC in accordance with the law, officially disclosing the specific information of the company’s shareholding at the end of the first quarter. The CSRC requires that institutional investors with assets under management of more than US $100 million must report their stock investment holdings, as well as the number of shares and market value of each stock within 45 days after the end of the quarter.
Berkshire’s message this time is that the company continues to buy in the volatile market. In the first few months of 2022, the US financial market is full of uncertainties: high inflation, changes in the interest rate environment, adjustment of the Federal Reserve’s monetary policy, unclear prospects for economic growth and deterioration of the international political environment. The market performance is very different from that of last year. This year, as of May 17, the S & P 500 index fell 14.21%, the NASDAQ index fell 23.97%, the U.S. 10-year Treasury bond index fell 11.64%, the price of junk bonds fell more than 10%, the total market value of cryptocurrency fell to $1.3 trillion, the non homogeneous token market almost stopped, and the volatility index (VIX) rose from 16.6 on January 3 to 26.1 on May 17.
In the market shock, institutional investors and retail investors have suffered financial losses to varying degrees and are eager to adjust their asset portfolio. Many investors have turned to stocks with higher dividend yield, and many have bought more ETF funds. Berkshire’s stock portfolio just gives investors an opportunity to learn from it.
According to the latest disclosure of the company, the total market value of the stock portfolio is US $363554 billion, including 45.91% of technology stocks, 27.08% of financial stocks, 13.67% of consumer stocks including health care, 9.26% of energy stocks and 4.08% of other stocks including communication and logistics. This is the static situation of shareholding as of March 31, after which the company will dynamically adjust its portfolio. Compared with the end of last year, Berkshire emptied albertway, Bristol Myers Squibb and Wells Fargo Bank, and significantly reduced its holdings of Royal Pharmaceutical (83%), Verizon communications (99%) and store Capital Corp (commercial real estate) (40%); It has invested in western Petroleum, HP, Citigroup, global paramount B shares, Celanese, Maxon, markel and United finance, and increased its holdings of Chevron (316%), Activision Blizzard (339%), free media C shares (265%) and Rh (20%).
technology stocks are the ballast of the portfolio
Berkshire is still particularly optimistic about the development prospects of technology stocks. At the end of the first quarter, the equity of technology was as high as 45.91%. In 2016, Buffett bought Apple stock, with a weight of 5.81% in the portfolio, and continued to buy in the following years. At the end of 2021, the weight was as high as 45.95%. Even on March 31, the weight remained at 42.79%, more than any individual stock. It can be seen that Buffett regards apple as the main growth point of future performance. Buffett is also optimistic about HP and snowflake software, which is well-known in Silicon Valley (cloud computing data storage company, founded in 2012 and listed in October 2014), and also favors Amazon (e-commerce and cloud services), while betting on stone (e-commerce financial technology company) and Latin American financial technology Unicorn Nu group. Buffett did not choose the popular spac company, nor did he choose traffic star stocks.
Just as the whole market is suffering, except HP, other technology stocks held by Berkshire have large floating losses. In particular, the rise and fall of Apple almost determines the profitability of the whole portfolio. In addition, the market performance of several other stocks is not ideal. This is the time to test the patience of investors: how do you believe in your choice when you lose money? Can you keep it until the clouds open and the sun rises? At present, the market is in turmoil. Once the uncertainties are eliminated and the market sentiment stabilizes, stocks such as apple and Amazon are expected to lead the market to a strong rebound.
financial stocks are the soul
Berkshire is a comprehensive operating company, but the insurance business occupies a high position. Holding more shares in financial services companies has always been a major feature of the company’s stock portfolio. Although the financial service industry is regarded as a traditional industry by most investors, it is also an industry with stable growth and dividend stability at any time. In the economic recession, the financial service industry, especially commercial banks, will bear greater credit risk, which will affect their profitability. However, compared with other industries, this industry is still liked by some investors. For Berkshire, the U.S. financial services industry has accounted for more than 20% of China’s GDP, and financial stocks are naturally the required industry for investment portfolio. According to the latest disclosure, financial stocks accounted for 27.08% of Berkshire’s stock portfolio.
Buffett still has some consideration on the choice of financial service enterprises. First of all, he has long held shares of Bank of America, American Express, Moody’s services, United States, New York Mellon, visa, MasterCard and other companies, and the total weight is large, while Citibank has recently bought. Buffett’s stock portfolio did not choose major banks in the industry, such as JPMorgan Chase, Goldman Sachs, Morgan Stanley and other financial center city banks. Secondly, the portfolio holds many shares of insurance companies, but does not choose top insurance companies, such as Prudential Financial Group, metropolitan insurance, AIA, Lincoln National and other large companies. Finally, Buffett chose exchange traded funds (ETFs), although the proportion is very small. Pioneer index fund refers to the fund developed by vanguard fund to track the S & P 500 index, while spdretf refers to the standard & Poor’s 500 fund trust developed by State Street global investment. The stocks of financial service enterprises can not get rid of the impact of the market environment, but the overall level of stock price fluctuation is low, which can be regarded as an option to avoid risks.
consumer shares are required
No matter what stage of the economic cycle, people’s daily life is always inseparable from clothing, food, housing, transportation and medical treatment. Stocks related to these activities have always been valued by Buffett. Among them, Buffett has long held Coca Cola, kraft food (controlled by Berkshire), Kroger, Johnson & Johnson, general motors, P & G and DeWitt. Perhaps out of the same investment philosophy (value investment), Buffett did not choose particularly big companies (with high stock prices), such as Wal Mart, Amgen, Pfizer, home depot, United Health and other star stocks. Consumer goods stocks accounted for 13.67% of Buffett’s stock portfolio.
Compared with technology stocks and financial stocks, these stocks have strong resistance to decline in the market shock.
Buffett has always preferred Coca Cola, Kraft Foods, Procter & Gamble, Johnson & Johnson pharmaceutical, Maxon and Yizi International (the overseas operation organization controlled by Kraft Foods), especially heavyweight stocks Coca Cola and Kraft Foods. Many investors like to pursue high-speed growth technology star stocks or concept stocks, but in the process of reshuffle in the financial market, changing thinking may not be a bad thing.
other positions show Buffett’s unique vision
Buffett’s stock portfolio is always adjusted according to market changes. As an advocate and practitioner of the concept of environment, society and Governance (ESG), Berkshire adheres to its investment philosophy. However, between economic growth and coping with climate change, enterprises have to choose economic growth and increase their holdings of traditional energy enterprises. In order to get involved in the meta universe economy, Buffett firmly bought Activision Blizzard, which is favored by Microsoft, in order to reap the huge financial benefits brought by the success of M & A. Although communication service is a basic service for American consumers, due to the long-term neglect of infrastructure investment by large American telecommunications enterprises, the slow progress of 5g and the low economic benefits of telecommunications enterprises, Buffett reduced his investment in telecommunications enterprises and almost emptied Verizon’s shares. Buffett lacks confidence in the U.S. manufacturing industry and does not invest in the hottest chip industry. Compared with other major industries, the prices of energy and communication stocks held by Buffett performed stably.
Since the end of the first quarter of this year (May 17 in North America), the S & P 500 index has fallen by 9.75% and the NASDAQ index has fallen by 15.72%. How does Buffett’s stock portfolio perform? Readers can estimate according to the average price and daily closing price, but they should not comment on Buffett’s investment philosophy based on temporary market changes. Investment should be long-term rather than short-term speculation.
