Berkshire Once Again a Net Seller of Equities in Q1

Wide-moat rated Berkshire Hathaway BRK.B has been fairly quiet about its gradual exiting of its long-held stake in Wells Fargo WFC, having sold off another 51.7 million shares (for an estimated $1.8 billion) during the March quarter. This marked the fourth straight quarter of meaningful sales of shares of the bank, which at one time had been a prized holding--a stake CEO Warren Buffett even tried several times over the years to increase above the 10% bank ownership limit for non-bank entities. At this point, it looks like Bank of America BAC, which has not been mired in the scandals that have plagued Wells Fargo, will be at the forefront of Berkshire's bank holdings, accounting for 14.5% of the insurer's $270.4 billion 13-F portfolio at the end of March. In just the past year, Berkshire has either winnowed down or eliminated stakes in Wells Fargo, JPMorgan Chase JPM, PNC Financial PNC, M&T Bank MTB, US Bancorp USB, and Bank of New York Mellon BK, all while adding to its stake in Bank of America. Even so, Apple AAPL remains Berkshire's top holding, accounting for 40.1% of the portfolio at the end of the first quarter.

The insurer was a net seller of equities during the March quarter, raising an estimated $7.7 billion from its sales of shares of Chevron CVX , Wells Fargo, Merck MRK, Synchrony Financial SYF, Liberty Global LBTYK, AbbVie ABBV, Axalta AXTA, General Motors GM, Suncor Energy SU, StoneCo STNE, Bristol-Myers Squibb BMY, US Bancorp, and Sirius XM Radio. Most of these sales were enacted on stocks that have appreciated strongly the past several quarters. In the case of Synchrony Financial and Suncor, Berkshire completely exited its stakes. As for Wells Fargo, the insurer still held close to 0.7 million shares at the end of March, but we expect that to be eliminated in the near term. Berkshire used an estimated $2.3 billion of its sales proceeds during the first quarter to put new money to work in Aon AON, add meaningfully to stakes in Kroger KR and Marsh & McLennan MMC, and increase its stakes in Verizon Communications VZ and Restoration Hardware.

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