Warren Buffett’s conglomerate, Berkshire Hathaway, is on a shopping spree, secretly snapping up shares of what’s rumored to be a banking entity. This move has been consistent over the last two quarters, with the conglomerate making a hush-hush request to regulators to keep their purchases under wraps. This tactic hints they’re piecing together a significant stake in a new venture. A peek into their latest earnings sheds light on a hefty $2.376 billion jump in their investments in the banking, insurance, and finance sector during the fourth quarter alone, a noticeable leap from the $1.213 billion increase in the third quarter. This suggests Berkshire is ramping up its investments, possibly in the financial industry.
Despite this new interest, Berkshire’s investment portfolio remains top-heavy, with five companies dominating the scene in 2023. These big five represented about 79% of their total investment value, a slight uptick from 75% in the previous year. Apple, Buffett’s prized asset, experienced a significant valuation boost, climbing $55.3 billion to reach $174.3 billion by year-end, even as its stock took a more than 5% hit early on. Chevron, another key holding, saw a decline in its stake value, dropping about 37% to $18.8 billion, mirroring a downturn in its stock price. On the brighter side, Berkshire saw its investments in American Express and Bank of America grow, while its Coca-Cola stake dwindled.
2023 was a milestone year for Berkshire, almost touching the $1 trillion market cap after a surge in their stock price. This achievement places them in the league of tech giants like Amazon and Apple. Their fourth-quarter earnings report boasted a record-breaking $167.6 billion in cash reserves, outdoing the previous quarter’s peak. Operating earnings too saw a rise, marking a new high compared to 2022. However, Buffett, in his annual letter, played the role of the cautious optimist, downplaying the likelihood of repeat blockbuster performances and emphasizing a strategy focused on steady growth and minimal risk.
Buffett’s communication also demonstrates a restrained outlook on acquisitions and investments, particularly on the global front, where he sees limited opportunities for impactful capital deployment by Berkshire. Despite this, 2023 saw Berkshire broaden its horizons with increased stakes in five prominent Japanese companies, diversifying its portfolio across various industries. Buffett hinted at these investments paving the way for potential global collaborations, although he acknowledged the slow and steady approach required due to Berkshire’s massive scale.
