Warren Buffett is known for holding onto his S&P 500 stocks forever. But that definitely wasn't the case recently.
The famed investor's Berkshire Hathaway unloaded its entire position in seven stocks, including General Motors, Celanese and United Parcel Service, in the third quarter, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Such radical moves are becoming more common with the diversified holding company.
It also shows how even value-minded investors must remain nimble in a volatile market for the S&P 500 and focus on the runaway winners. "The lesson for investors: The weeds wither away in significance as the flowers bloom," Buffett wrote in Berkshire Hathaway's 2022 annual report. "Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well."
Berkshire Hathaway Vs. The S&P 500
Buffett would be the first to tell you he sometimes waits too long to sell some stocks. "At this point, a report card from me is appropriate: In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so," he said in his annual report.
And he's been a little worse than so-so this year. Berkshire Hathaway shares are up 15.5% this year, trailing the S&P 500's 17.8% gain. The S&P 500, though, has a total return of more than 18% including dividends.
Buffett Dumping Some S&P 500 Losers
Buffett usually likes to add to positions when they're down, so it's interesting when he sells some losers. General Motors is the most telling example. Berkshire Hathaway unloaded 100% of its 22 million shares in the U.S.-based vehicle maker in the third quarter. That position was valued at $848.3 billion on June 30.
Shares of GM are down 16% this year. That makes it the worst performer among all the stocks Berkshire Hathaway sold off completely in the period. GM, struggling to compete in electric vehicles, is expected to post 3.6% lower profit in 2023 and nearly 8% less in 2024.
Another loser Berkshire Hathaway is dumping is UPS. Shares of the delivery service are down more than 16% this year. It was a tiny position, accounting for just 59,400 shares in June valued at just $10.6 million. But again, fundamentals don't look great. The company is seen making just $8.83 a share in 2023, down 32% from 2022.
Locking In S&P 500 Gains
Not just losers are getting sold. Just as Berkshire Hathaway unloaded GM, it locked in gains on chemical maker Celanese. Shares are up nearly 25% just this year.
Apparently, that gain was enough to warrant hitting the sell button. Berkshire Hathaway sold all of its 5.4 million shares, valued at $620 million as of June 30. But in a classic move, Buffett is selling just before the fundamentals soften. Analysts think the company's profit per share will drop 43% in 2023. And profit isn't expected to return to 2022 levels until 2027.
Clearly, Buffett isn't selling all his winners or dogs. He's hanging onto all his 107 million shares of Nu Holdings. Shares of Nu are up more than 92% this year, making it one of his top-performing positions. Meanwhile, he retained all 93.7 million shares of Paramount Global, despite shares falling nearly 26% this year.
Still, when you see Buffett completely unloading shares, you can see he doesn't expect a rally any time soon.
Buffett's Unloaded Stocks
Berkshire Hathaway positions 100% sold in third quarter
| Company | Symbol | Shares held June 30, 2023 | Shares held Sept. 30, 2023 | |
|---|---|---|---|---|
| General Motors | 22,000,000 | 0 | Consumer Discretionary | |
| United Parcel Service | 59,400 | 0 | Industrials | |
| Johnson & Johnson | 327,100 | 0 | Health Care | |
| Procter & Gamble | 315,400 | 0 | Consumer Staples | |
| Mondelez International | 578,000 | 0 | Consumer Staples | |
| Celanese | 5,358,535 | 0 | Materials | |
| Activision Blizzard | Acquired by Microsoft | 14,658,121 | 0 |
