Since the onset of the coronavirus pandemic, Buffett has made a brave face. Recent revelations cast doubt on this bravery.
According to David Kass, a finance professor at the University of Maryland, Buffett may have sold his entire stake in Wells Fargo. It is a rare gesture. The Oracle of Omaha is known for its long-term approach, and Wells Fargo was one of its oldest posts.
“The sales of Berkshire stocks, its list of top stocks, the fake accounts scandal and Wells Fargo balance sheet restrictions, and Buffett’s $ 2 billion spending spree Bank of America stocks all support elimination, ”Kass said.
This is not the only curious transaction of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).
Warren Buffett’s Berkshire Hathaway Inc said on Friday it had sold much of its stake in Goldman Sachs Group Inc, despite the billionaire’s assurance that the banking sector was not a “primary concern” for him during the coronavirus pandemic, “reported Reuters.
It was not the only divestiture of assets. “Berkshire sold its remaining small stakes in the insurer Kos travelers and oil refiner Phillips 66, and tweaked several positions, ”Reuters added.
To add to the mix, Buffett also sold all of his airline shares. Months before, he had said he “didn’t sell.” Things are changing quickly in the new reality of the coronavirus!
Buffett buys this stock
Of course, Buffett and Berkshire Hathaway are still heavily invested. The bulk of the portfolio is deployed through outright equity investments and ownership of multi-billion dollar companies.
But there is no denying that he is cautious in today’s market. Look at his growing treasure. Berkshire Hathaway has $ 150 billion in cash against a market cap of $ 500 billion. This means that more than a quarter of the company’s value is tied up in cash.
Buffett is cautious, but there is one stock he loves: his.
According to Insider markets, its holding company spent “between 7.4 and 7.6 billion dollars in Berkshire shares from the beginning of May to the end of July, thus beating their previous record of buybacks in three months”.
As always, “Buybacks indicate that Buffett considers Berkshire stock to be undervalued, as its policy is to only buy it back when it trades below a conservative estimate of Berkshire’s intrinsic value.”
Buffet does not like airlines. He doesn’t like Wells Fargo, Phillips 66, Goldman Sachs or Travelers. He doesn’t like the stock market so much that he’s willing to sit on some historical treasure.
Still, Berkshire Hathaway, the company he knows best, is apparently a worthy bet. The stock is trading at 1.3 times the book value, a discount at its five-year average.
If you want to follow the master, just buy Berkshire stocks.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. David Gardner owns shares of Amazon. The Motley Fool owns shares and recommends Amazon and Berkshire Hathaway (B shares) and recommends the following options: long January 2021 calls for $ 200 on Berkshire Hathaway (B shares), short January 2021 put $ 200 on Berkshire Hathaway (B shares) , runs January 2022 calls for $ 1940 on Amazon, long calls in January 2022 for $ 1920 on Amazon, and short calls for $ 200 in September 2020 on Berkshire Hathaway (B shares). Mad contributor Ryan Vanzo has no position in the stocks mentioned.