Warren Buffett’s Berkshire Hathaway on Tuesday announced two major new investments, revealing a $ 8.6 billion stake in the phone company Verizon Communications and a $ 4.1 billion stake in oil company Chevron.
The investments were disclosed in a regulatory document detailing Berkshire’s US equity stakes on December 31.
Berkshire also announced a new $ 499 million stake in professional services company Marsh & McLennan.
To make room, Berkshire has reduced its investments in several companies, including Apple, although at approximately $ 121 billion the iPhone maker remains by far its largest ordinary stake.
Verizon’s shares rose 3 percent, Chevron rose 2.2 percent and Marsh remained unchanged in after-hours trading after Berkshire’s filing.
Tuesday’s process signals where Buffett and his portfolio managers, Todd Combs and Ted Weschler, see value, although Buffett usually deals with larger investments.
It also shows that Berkshire is finding ways to deploy its cash treasury, which totaled $ 145.7 billion on September 30.
The Omaha, Nebraska-based conglomerate has more than 90 companies, including Geico auto insurance, the BNSF railroad and Dairy Queen ice cream, but it has been five years since its last major acquisition, a $ 32.1 billion purchase from Precision Castparts.
Berkshire began investing in Verizon, Chevron and Marsh in the third quarter of last year, and obtained permission from the Securities and Exchange Commission to delay disclosure of holdings.
The SEC has repeatedly allowed Berkshire to discretely invest in companies over the years, to prevent investors from hitching a ride on Buffett’s bets and raising companies’ share prices before Berkshire finishes buying.
Tuesday’s filing showed Berkshire, a major investor in Bank of America, cutting smaller banking rivals, reducing its stake in Wells Fargo and dismissing JPMorgan Chase, M&T Bank and PNC Financial Services Group Inc.
Berkshire also invested more in pharmaceuticals Abbvie, Bristol-Myers Squibb and Merck & Co., while selling a small stake in Pfizer Inc., the vaccine maker COVID-19. It also eliminated mining company Barrick Gold Corp.
Doug Kass, managing partner at Seabreeze Capital Investment in Palm Beach, Fla., Said Verizon’s stake “makes sense” for Berkshire, reflecting the phone company’s dividend payments and the prospects for wireless revenue growth.
The reduction in bank holdings may reflect Buffett’s concern about persistent low interest rates and coronavirus-related loan losses, Kass added.
Berkshire is expected to provide more details on its investments when it discloses year-end results and Buffett’s annual letter to shareholders on February 27.