The Usual Suspect

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What's going on?

Looks like Buffett’s been up to his old tricks: a filing released by Berkshire Hathaway late on Tuesday revealed it’s sold off some of its Apple stock and quietly bought into three other companies.

What does this mean?

Investors don’t usually find out what the Buffett-run investment firm has been buying and selling until its quarterly updates, so this one-off filing might’ve caught investors off guard – especially because it was selling off some of its stake in Apple and holding on to “just” $120 billion worth of the tech giant’s shares. But Berkshire didn’t just trim back there: it recently sold stakes in JPMorgan Chase and Wells Fargo too. And since that freed up some loose change, the conglomerate bought into telecom giant Verizon, insurance broker Marsh & McLennan, and bruised oil major Chevron instead.

Why should I care?

For markets: When Buffett talks, investors listen.

Berkshire Hathaway is a global bellwether for investors: where Buffett’s team boldly goes, other investors follow. So it might come as little surprise that Verizon, Marsh & McLennan, and Chevron’s shares initially rose on Wednesday, while Apple, JPMorgan, and Wells Fargo’s fell. Investors might’ve seen that coming, though: data from TipRanks shows investor sentiment had recently turned “very negative” on the three stocks Berkshire sold.

For you personally: Portfolio rebalancing in practice.

There’s a lesson in Berkshire’s latest update too: the importance of rebalancing your portfolio. See, banks have done well in the last few months, and Apple – which is the investment firm’s single biggest investment – has even seen its value triple since Berkshire last sold some of its stake back in 2019 (tweet this). By selling those stocks, then, Buffett’s business locked in some profits and made sure no single industry or company sways its portfolio too much.

Originally posted as part of the Finimize daily email.

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