🎙️ Berkshire's Portfolio Tweaks

This Friday, just 13 days out from Thanksgiving, Mr. Market threw a tantrum. Stock indexes sold off by a wide margin after a heated post-election run, but it was more akin to a breather than a crash.

And thus, earnings season continues on, as Walmart, Lowe’s, Target, and John Deere all report next week, with the most eagerly awaited filing belonging to none other than the market’s golden child, Nvidia, which reports on Wednesday.

More on markets below.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• Berkshire’s latest portfolio moves

• Why U.S. money market funds keep growing

This, and more, in just 5 minutes to read.

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In The News

👀 Berkshire Hathaway’s Latest Portfolio Changes

Every few months, we get a fresh slate of 13F filings telling us what changes institutional investors have made to their portfolios — at a 45-day delay. And eagle-eyed 13F watchers are all excited at the latest batch.

While you probably shouldn’t be borrowing conviction from professionals in chasing their investments on a lag, it is interesting to see, for example, whether Buffett’s Berkshire is significantly loading up on one stock or cutting its positions completely in another.

Buffett’s Sidekicks: Even though he’s probably not making many of the portfolio decisions these days, at least not the “smaller ones” (as if $100 million trades are small), there continues to be intrigue around portfolio changes that are directly and indirectly endorsed by the Oracle of Omaha.

Most notably, Berkshire continues to massively reduce its positions in Bank of America and Apple, generating the modest sum of $23 billion from Apple stock alone last quarter. Over the course of this year, Berkshire has sold hundreds of millions of shares in Apple, tallying up more than $90 billion in estimated capital gains along the way.

• Nonetheless, Apple’s stock has levitated — undeterred — more than 20% this year, even with all that selling pressure. And after offloading $10 billion worth of Bank of America stock, Berkshire shareholders still maintain a 10% stake in one of the country’s biggest banks, too.
  

• We were surprised to see Berkshire cut its several-hundred-million-dollar stake in the popular suburban beauty retailer, Ulta, after having just bought the stock a quarter before, but such tweaks on the portfolio’s margins are not uncommon.

See the full list of investment tweaks below:

Additional commentary here from the financial writer Kevin Carpenter: “The Sirius XM and Liberty Media SXM tracker numbers above are more than a little misleading. These “sales” are merely the result of the combination back in September that turned Sirius XM into an independent public company. In fact, Berkshire appears to have actually added more shares of SIRI in the third quarter.

• This 13F is current only as of September 30, meaning that Berkshire’s filing on October 31 (showing an ownership interest of 33.2% in the satellite radio provider) is the most up-to-date information publicly available.

Why it matters:

Investors can sell their stocks for many reasons, ranging from tax considerations to simply finding what they perceive as more attractive opportunities. So, Berkshire’s stock sales are, generally speaking, not wholesale condemnations of these businesses and their valuations.

New additions? More interesting to some is what Berkshire is adding. On that front, the only two new positions in the past quarter were Pool Corporation and Dominos.

• Both are popular names amongst quality investors who focus on GARP (growth at a reasonable price), and while neither is cheap, they both have excellent track records in generating attractive returns on capital, with understandable and reliable business models that fit naturally into Berkshire’s ethos.
  

• You’re probably familiar with Dominos, but if you don’t know Pool, it’s a leader in the…pool industry. From installation to upgrades and maintenance, Pool Corp. is a beneficiary of an American cultural staple: Having a pool in your backyard. As mentioned, Buffett was almost certainly behind neither of these, with the decisions to buy likely being made by Todd Combs or Ted Weschler.

On net, though, Berkshire is once again a seller of stocks, and many see that as an indication of how history’s greatest investor is seeing the markets right now, concluding that there are many more expensively priced stocks than bargains.

Read more or view Berkshire’s full portfolio here

More Headlines

📈 Disney stock surges on streaming growth, guidance

🚀 Musk's SpaceX is preparing to launch a tender offer in December at $135 per share

🚨 FBI raids Polymarket CEO’s home, seizing phone, electronics

🏦 Banks flood U.S. debt market in biggest single-day raise since 2016

📉 Indian shares, including Nifty 50, slip into correction as rate woes adds to sour sentiment

🚗 The $7,500 tax credit for electric vehicles may be coming to an end

😬 Cathie Woods says her volatile ARK Innovation strategy shouldn’t be a “huge slice of any portfolio”

💵 U.S. Money Market Fund Assets Surpass $7 Trillion

Cash, baby cash. U.S. money-market fund assets have surpassed the $7 trillion mark for the first time, according to Crane Data. The total rose by about $91 billion in the past week alone. 

The milestone follows months of consecutive records in money-market fund assets, defying expectations that the industry might lose steam as the Federal Reserve cuts interest rates. Despite the Fed’s two cuts, investors are still satisfied with parking money in cash. 

Bloomberg reported that “investors have continued to pile into money-market funds after U.S. policymakers cut their benchmark by a half-point in September and a quarter-point this month." 

• More than $700 billion has flooded into the funds in 2024.
  

• The continued appeal of money-market funds seems to be their "superior yields relative to other instruments — especially bank deposits."

Meanwhile, the extent of the Fed’s easing cycle remains to be seen.

As one analyst noted: "There's little in the data to justify cuts in the current environment of strong growth and sticky inflation, especially with uncertainty around tariffs and the potential for deregulation contributing to animal spirits. If that's the case, what's the rush to move money out of money-market funds and into other assets?"

Why it matters:

Notably, money-market funds "tend to be slower to pass on the effects of lower rates when compared to banks.”

That has coupled with institutions and corporate treasurers seeking to "outsource cash management during such periods in order to capture yield, rather than grapple with it themselves.”

• The rapid growth of U.S. money-market fund assets started in earnest two years ago. The continued growth demonstrates enduring appeal for the investment vehicles as investors look for stable, reliable returns — even as the Fed cuts rates, and even as quality equities soar in valuation. The S&P 500 has posted one of its best years of the 21st century through mid-November. 

A strong rebuttal: As Bloomberg notes, the money-market growth "offers a rebuttal to questions over whether the industry could remain in vogue" in this market.

Could the trend continue into 2025, even if the Fed continues to cut rates and stocks keep marching higher?

Read more

Quick Poll

On Wednesday, we asked: What is your preferred app for music and podcasts?

— Most investors who replied opt for Spotify. Apple was a distant second. One fan of our podcasts simply wrote of Spotify: “I saw TIP there...” Wrote another: “Ease of use. Expansive library of channels often well-tailored to my tastes.”

— Another Spotify fan said, “I was an OG with Spotify (2010) - I want to spend my money on a company where music curation is their core competence, not a supplementary one.”

— Other answers included YouTube and Qobuz.

See you next time!

That's it for today on We Study Markets!

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