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Berkshire reveals confidential bets on Verizon and Chevron

Warren Buffett’s Berkshire Hathaway on Tuesday revealed multibillion-dollar holdings in telecommunications company Verizon and oil and gas major Chevron, investments it had previously kept confidential.

The investment conglomerate revealed that it bought 58.3 million shares of Verizon in the third quarter of 2020 and an additional 88.4 million in the fourth quarter, bringing its stake to $ 8.6 billion, one of its largest holdings.

According to deposits Along with the Securities and Exchange Commission, the Omaha, Nebraska-based company also bought 48.5 million Chevron shares in the second half of 2020 for a value of $ 4.1 billion at the end of last year, as well as 4.3 million shares of insurance broker Marsh & McLennan valued at $ 499.3 million.

Berkshire, owner of BNSF railroad and insurer Geico, did not explain why he had asked U.S. securities regulators for permission to keep share purchases confidential in his third quarter returns. He did not respond to a request for comment.

Buffett is working with his deputies Todd Combs and Ted Weschler to allocate the $ 245 billion stock portfolio. It was not clear who made the decision to invest in Verizon and Chevron.

Verizon shares were up 3 percent and Chevron was up 2.5 percent in after-hours trading following news of the investments. The purchases made Berkshire one of Verizon’s five largest shareholders, with about 3.5% of the telecommunications company, according to data provider Bloomberg.

Darren Pollock, portfolio manager at Cheviot Value Management, said the purchases from Verizon and Chevron “make perfect sense” given that both are “relatively undervalued and offer high dividend yields.”

“In the stock prices seen in recent months, Verizon and Chevron are available with a considerable margin of safety – limited downside risk while producing significant income and moderate upside potential,” Pollock said. “At worst, it’s a relatively safe parking space for over $ 12 billion of Berkshire’s growing cash balance.”

The so-called Oracle of Omaha has worked to retool the company’s portfolio over the past year, shifting its investments as the coronavirus crisis rocked much of the business world.

Performance line graph (%) showing Berkshire Hathaway: since the crisis

Berkshire has reduced its holdings in several bank stocks, selling the remaining shares it held in JPMorgan Chase, PNC Financial Services and M&T Bank in the fourth quarter.

The company also reduced its position in Apple by 57.2 million shares, although a 14.6% rally in the iPhone maker’s shares in the fourth quarter resulted in an increase in the value of Berkshire’s stake. . Apple remained its biggest investment in stocks, worth just under $ 118 billion at year-end.

Berkshire tweaked its investments in several drugmakers during the period. It increased its stakes in AbbVie, Bristol-Myers Squibb and Merck, but sold out of Pfizer.

Investors are waiting for Mr. Buffett’s annual letter to shareholders for clues as to how the 90-year-old dean of the investment world plans to use the roughly $ 146 billion cash stack of Berkshire. Berkshire’s letter and annual results are expected later this month.

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