Berkshire Hathaway divests from long-held stocks amid market shifts

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Berkshire Hathaway divests from long-held stocks amid market shifts
Credit: © Reuters.

Berkshire Hathaway Inc . (NYSE: BRKa ), the conglomerate led by Warren Buffett, has made significant changes to its investment portfolio, according to recent SEC filings. The company has completely divested from several long-standing holdings, including General Motors (NYSE:NYSE: GM ), United Parcel Service (NYSE:NYSE: UPS ), Mondelez (NASDAQ: MDLZ ) International ( NASDAQ :MDLZ), Procter & Gamble (NYSE:NYSE: PG ), and Johnson & Johnson (NYSE:NYSE: JNJ ), amid various economic pressures and strategic shifts.

The move comes as Berkshire's Class A shares have seen a near 4,400,000% gain since Buffett took the helm in the mid-1960s. Investment managers Ted Weschler and Todd Combs have been active in reshaping the portfolio during the third quarter. The exit from General Motors, held since the first quarter of 2012, was likely influenced by increased labor costs following a new agreement with the United Auto Workers union and a downturn in electric vehicle demand as loan rates rise.

Similarly, UPS, part of Berkshire's portfolio since the first quarter of 2006, saw its remaining shares sold due to economic uncertainties and higher labor expenses stemming from new labor contracts. Mondelez International, with popular brands like Oreo and Ritz under its belt since the second quarter of 2007, was dropped amidst consumer resistance to price hikes and concerns over a heavy debt load that echoed issues seen during Kraft Heinz’s writedown incident.

Procter & Gamble, a Berkshire holding since the first quarter of 2005, was released as it faced volume declines and currency headwinds. Additionally, Johnson & Johnson, a staple in the portfolio since the first quarter of 2006, was sold off due to litigation issues related to talc cancer claims and Buffett’s preference not to closely track drug development catalysts—despite JNJ's strong value proposition indicated by its rare AAA credit rating.

Despite these sell-offs, Apple (NASDAQ: AAPL ) remains Berkshire's dominant position even though it experienced a valuation dip. Reduced positions were also noted in other companies such as Amazon (NASDAQ: AMZN ), HP Inc. (NYSE:NYSE: HPQ ), Aon (NYSE:NYSE: AON ), Markel (NYSE:NYSE: MKL ), and Globe Life (NYSE:NYSE: GL ).

In contrast to these divestments, Berkshire Hathaway has made new investments including an $8 million interest in the Atlanta Braves baseball team and expanded holdings in Liberty Media (NASDAQ: FWONA ) with stakes in Liberty SiriusXM Group and Liberty Live Group. In addition to these acquisitions, Berkshire invested a fresh $44 million in Sirius XM (NASDAQ: SIRI ). To maintain competitive secrecy, Berkshire has sought confidential treatment for an undisclosed new holding.

With these portfolio adjustments reflecting Buffett's strategic thinking amid current market dynamics, Berkshire Hathaway's cash reserves have soared to a record $157 billion. This substantial cash pile underscores the conglomerate's ability to capitalize on investment opportunities or weather potential market downturns.

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