All eyes are on the quarterly holding report finally released by the 'Stock God' Buffet in charge. $Berkshire Hathaway-A (BRK.A.US)$ The latest form 13F filing shows that Berkshire's total market cap in the third quarter reached $266 billion, a decrease from the previous quarter's $280 billion, with the top ten positions still accounting for approximately 90%.
According to the holding data, Apple remains the largest holding in its portfolio, holding 0.3 billion shares, with a market cap of approximately $69.9 billion, accounting for 26.24% of the portfolio. While Apple continues to occupy the top spot, the number of shares held has decreased by 25% from the previous quarter, significantly dropping from 0.905 billion shares at the beginning of the year to the current 0.3 billion shares.
Still the largest holding in its investment portfolio, with 0.3 billion shares and a market cap of about $69.9 billion, accounting for 26.24% of the portfolio. $Apple (AAPL.US)$ Despite Apple continuing to hold the top position, the number of shares held has decreased by 25% from the previous quarter, dropping significantly from 0.905 billion shares at the beginning of the year to the current 0.3 billion shares.
$American Express (AXP.US)$ Promoted to the second largest holding, holding approximately 0.152 billion shares, with a market cap of approximately $41.1 billion, accounting for 15.44% of the investment portfolio, with the number of holdings remaining unchanged compared to the previous quarter.
$Bank of America (BAC.US)$ Ranked third, Berkshire Hathaway reduced its holdings by nearly 23%, holding a stake in Bank of America of 11.88% as of the end of the quarter. It is noteworthy that regulatory data shows that after entering October, Berkshire Hathaway continues to reduce its holdings in Bank of America, with the stake already dropping below the key disclosure threshold of 10%.
Looking at the latest operational trends, Berkshire Hathaway has newly established positions in two stocks— $Domino's Pizza (DPZ.US)$ 、 $Pool Corp (POOL.US)$ . Influenced by Berkshire Hathaway's increased positions, Domino's Pizza and Pool Corp each surged more than 8% and nearly 7% in pre-market trading.
Why do you like these two companies?
Market analysis believes that the success of Domino's Pizza is simply attributed to its efficient supply chain management. By producing raw materials in its own factories and sharing them with suppliers, Domino's has generated over 60% of its revenue. In addition, Domino's also has a "profit-sharing agreement" with franchisees, sharing 50% of the pre-tax profits from the supply chain business with franchisees, thus increasing their loyalty and renewal rates.
In other words, Domino's operates similar to a standard franchise + supply chain business. Along with its affordable products and good taste, as well as decent past performance, coupled with the company's long-standing high share buybacks and cash dividends. Despite average performance in the last two to three years, looking at a longer timeline, this company is also a big bull stock.
Pool Corp is the world's largest wholesale distributor in the pool industry. In recent years, with its sharp market insight, it has captured the wave of home pool improvements sparked by the pandemic, thus achieving steady performance growth. However, in recent years, faced with the dual pressure of high interest rates and high house prices, the company's performance has encountered unprecedented challenges. Looking ahead, as interest rates gradually decline and signs of market demand recovery begin to emerge, it has brought new hope for the company's performance recovery.
According to market analysis, there are some commonalities in the two new holdings Berkshire Hathaway acquired in the third quarter:
So far this year, both have underperformed the overall market. Domino's Pizza's stock price has risen by about 6% year-to-date, while Pool's stock price has fallen by 9%.
Due to spending pressures on low-income consumers, the stock price of domino's pizza has been suppressed. With people being more cautious about discretionary spending, the demand for swimming pools has been sluggish, which has weighed down pool's stock price.
However, some viewpoints suggest that Domino's Pizza and Pool may be operated by Warren Buffett's two successors, Ted Weschler and Todd Combs, as positions below $1 billion are usually their stakes rather than Buffett's, who prefers to focus on positions exceeding $1 billion.
In addition, Berkshire has almost completely sold out of their holdings. $Ulta Beauty (ULTA.US)$ It is worth noting that Ulta Beauty is a stock that Buffett only started to hold in the second quarter. Following this news, Ulta Beauty's stock price plummeted nearly 6% in pre-market trading.
In recent years, Berkshire's practice of quickly buying and selling stocks has become more common. Some investors, upon learning about Berkshire's new holdings, buy stocks, just like they did with Ulta in mid-August. However, if Berkshire's positions change too quickly, "copying homework" may no longer be a good strategy.
It is worth noting that earlier this month, Berkshire's third-quarter financial report revealed that after selling off Apple and Bank of America, Berkshire's third-quarter cash reserves increased by $48 billion to $325.2 billion, reaching a record high.
Furthermore, according to the latest filing, Berkshire did not conduct any share buybacks in the third quarter. This marks the end of Buffett's six-year streak of share buyback activities.
Buffett's criteria for past share buybacks have been very simple: only when the stock price is considered "cheap" will he proceed with buybacks. The latest filing mentions that Buffett tends to repurchase when the stock price is below the company's intrinsic value – a conservative standard reflecting Berkshire's long-term asset value. Analysts believe that this absence of buybacks sends a clear signal to the market: Berkshire's stock is overvalued.
Aswath Damodaran, a professor at NYU Stern School of Business, stated that Buffett's decision to hold cash indicates Berkshire is taking a conservative stance, possibly due to high stock prices. He said, "This is their signal of caution towards the market. They believe that the market is overvalued, hence the caution."
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Editor/Somer
