Warren Buffett is widely considered one of the greatest investors of all time.
So when he makes an investment move it’s broadcast across the entire financial world.
This happened just last quarter when it was announced that his company Berkshire Hathaway
opened a $4.1 billion position in the massively successful Taiwan Semiconductor Manufacturing
Company, better known as TSMC.
That became a huge piece of news that drove the stock price up.
Naturally, this led many investors to speculate the thesis Buffett had behind his investment.
Would this become a new core holding of Berkshire?
TSMC has a wide economic moat in a growing industry.
They even manufacture chips for Apple, which is Buffett’s largest investment.
It’s not hard to imagine that he could have become bullish on the company.
Maybe he would even continue adding to the position.
However, all that speculation now seems to be meritless.
A new quarterly filing just showed that Berkshire reduced its TSMC position by 86%.
That means they sold over $3.7 Billion of TSMC stock!
The release of the news sent shares tumbling down 7%.
That is a big impact.
In today’s video, I’m going to speculate why he sold TSMC and share all the latest
buys and sells for Berkshire Hathaway.
My name is Zach and you should leave a like and subscribe to the channel if you enjoy
the video.
Warren Buffett’s company, Berkshire Hathaway, just reported a new 13F filing showing all
their latest buys and sells as of the end of 2022.
There was some big news in that report, including the massive 86% reduction in TSMC.
The original position was bought at an estimated average buy price of $75.16.
In the following months, the stock price rose from 20-30% above that price.
Most of this gain happened at the start of 2023 with the price up over 24% year to date.
So given this news is just coming out, you might think that Berkshire sold at a solid
gain.
However, they actually sold at an estimated average price of $71.53.
So given those numbers they sold at a loss.
The filing is as of December 31st, 2022, so no matter what they missed out on the 2023
run up price.
This is a very important detail that is not reflected in many of the articles I’ve read.
Many outlets are assuming that Buffett sold after easy gains on the run up in price.
As I just explained, that is not the case.
So why did he sell?
Well we don’t yet have any official reasoning.
This will likely be provided at the Berkshire Hathaway annual meeting in the coming months.
For now, we can speculate on many of the publicly available factors.
For example, analysts expect earnings to decline in 2023 over 10%.
This is due to an oversupply in chips, most notably in the weak PC market.
This was highlighted in both Microsoft and Intel’s latest earnings reports.
On top of this, there are Geopolitical risks with the looming threat of China possibly
invading Taiwan, where TSMC operates.
Additionally, there is the general trend of western countries wanting to manufacture more
semiconductors domestically.
TSMC is following that trend and investing to build 2 new fabs in the United States.
On the positive side, TSMC just reported a great earnings report in January.
They continued strong earnings growth.
The company really seems to be dominant.
It has a wide economic moat, growing earnings, and a fair valuation.
It’s not hard to think that this could have been a Buffett stock.
However, this sudden change does not seem like Buffett behavior.
It’s unlike him to get out of something like TSMC that quickly.
The business conditions did not change that much and most of the factors I just mentioned
were known at the time of purchase.
All this leads me to believe that Warren Buffett did not purchase TSMC himself.
Instead, it was likely bought by one of his smaller managers Ted Weschler or Todd Combs.
They often perform a lot of these smaller trades.
Buffett has stated they have limited capital of around $10-20 billion so if they want to
buy a stock they like better, they would need to sell something else.
That often leads to Todd and Tedd doing more trades.
This is unlike Buffett who can go big and access Berkshire’s $100 billion cash cushion
to make investments.
Other sales in the quarter included a 91% reduction in US bancorp, ticker symbol USB.
A 59% reduction in Bank of New York Mellon, ticker symbol BK.
Both of these were smaller positions and less notable.
Additionally, Berkshire sold 12.35% of its activision blizzard position, ticker symbol
ATVI.
That one is interesting because we know Buffett bought some of that himself as he mentioned
in the last annual meeting.
That could be a slight reduction by him or perhaps one of his managers owned some as
well.
Finally, Berkshire sold 1.44% of its massive $29.25 billion Chevron stake.
Once again, this could be small trimming by Buffett as we know he bought this or a sale
from one of his smaller managers who owns the stock too.
So that’s everything Berkshire sold in the last quarter, but did they buy?
Well Berkshire increased their small position in Paramount, ticker symbol PARA, by 2.65%.
This was likely by Todd or Tedd.
Interestingly, Berkshire increased its stake in Apple by 0.04%.
I thought that could have been a sign, but after doing a little research it seems to
be extremely minor.
Berkshire just completed its acquisition of Allegheny, which is an insurance company.
They had an investment portfolio with 333,860 shares of Apple.
That is the exact number included in Berkshire’s latest filing.
So this was likely not a purchase, but an inclusion of Alleghany’s shares.
Despite this, Berkshire is still increasing their ownership stake in Apple through the
massive share buybacks.
Buffett described this in great detail during last year's annual letter.
I recommend you watch my video overview of that letter.
Finally, Berkshire increased its stake in Louisiana Pacific, ticker symbol LPX, by 21.55%
This is still a small position and likely a todd or tedd investment.
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