When Warren Buffett, one of the greatest investors of all time, makes a move, the market listens. His company Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) maintains an equities portfolio worth roughly $337 billion, and investors, through regulatory filings, can see what stocks Berkshire is buying and selling every three months.
While Berkshire's buys often get a lot of attention, investors should also keep an eye on his sales.
Berkshire selling a stock is not always indicative of that stock's performance or whether you should sell, it's still something to be aware of. If you're holding a stock Berkshire is selling, maybe you're missing something in your investment thesis. Here are six stocks Berkshire completely exited this year.
1. Verizon
Berkshire entered the year holding roughly 158.8 million shares of the large telecommunications company Verizon (NYSE:VZ), which were valued at close to $8.3 billion. But in the second quarter, Berkshire completely closed out that position, possibly because the company was repositioning for a much different economic and monetary outlook.
Berkshire may have been right to be concerned. When it released its second-quarter results, Verizon also lowered its adjusted earnings guidance for the full fiscal year to a range of $5.10 to $5.25, down from $5.40 to $5.55. The company also lowered its guidance for revenue growth.
2. STORE Capital Corp
Heading into 2022, Berkshire held a little under $840 million in STORE Capital Corp (NYSE:STOR), the sole real estate investment trust (REIT) in Berkshire's portfolio. As a REIT that gets special tax treatment, STORE paid out at least 90% of its annual taxable income in dividends.
The company ran a triple-net lease single-tenant model in which it bought properties and then leased those properties back to the owners so the company didn't have to deal with the expenses of maintaining the property. In September, the fund GIC and funds managed by Oak Street announced they would acquire STORE Capital for roughly $14 billion in cash, so the stock has now really gone as far as it's going to go.
3. Abbvie
Berkshire came into the year holding about $410.7 million of the biopharmaceutical company Abbvie (NYSE:ABBV) but quickly exited the company in the first quarter of the year. It hasn't at all been a bad year for Abbvie with the stock up more than 21% and widely beating the broader market.
Abbvie reported mixed results for the third quarter, with adjusted earnings beating estimates but revenue coming in less than expected. The company also confirmed the midpoint of its full-year earnings guidance range but lowered the upper bound.
4. Royalty Pharma
Berkshire sold its stake in the company Royalty Pharma (NASDAQ:RPRX), which totaled about $344 million at the start of 2022. Royalty Pharma funds biopharma research and development in a number of different ways and then acquires royalty interests in those companies, so it's a bit like an incubator.
It's hard to see exactly what Berkshire didn't like, as the stock is up more than 5% in a down year. The company's third-quarter earnings and revenue beat analyst estimates, and the company raised full-year guidance. Perhaps Berkshire just didn't think the company had good long-term prospects.
5. Bristol-Myers Squibb
It was a bad year to be a pharmaceutical company in Berkshire's portfolio, as the company clearly didn't like its exposure to the sector. Berkshire entered 2022 with about $324 million of Bristol-Myers Squibb (NYSE:BMY) stock but exited its position in the first quarter of the year. This is another stock that has done quite well up more than 24% this year, so it seems pretty clear that something earlier this year left Buffett and Berkshire with a bad taste in their mouths when it came to the pharmaceutical space.
6. Wells Fargo
Heading into this year, it was well known that Buffett and Berkshire had had enough of the large bank Wells Fargo (NYSE:WFC). Wells Fargo found itself in the hot seat in 2016 when it came to light that bank employees had been opening credit card and bank accounts for people without their consent.
Since then, the bank has faced a number of fines and punitive regulatory actions, including an asset cap, which prevents it from growing its balance sheet. It was also rumored that Buffett didn't like the bank's hiring of Wall Street veteran Charlie Scharf as CEO in 2019, even though Scharf appears to be doing a decent job. The sale ends more than three decades of Berkshire owning the stock.
10 stocks we like better than Berkshire Hathaway
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of December 1, 2022
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Bristol-Myers Squibb. The Motley Fool recommends Store Capital and Verizon Communications and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool has a disclosure policy.
