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Morningstar | Berkshire Hathaway Initiates Stakes in JPMorgan Chase, Oracle, PNC Financial, and Travelers in 3Q

There were a few surprises in wide-moat Berkshire Hathaway's third-quarter 13-F filing. While we expected to see buying activity, given the company's recent 10-Q highlighted $17.7 billion in purchases (offset by $5.2 billion of sales), our belief had been that much of that capital had been directed to narrow-moat Apple, with Berkshire having already acquired an additional 86.6 billion shares in the technology firm during the first half of the year and CEO Warren Buffett noting in late August that Berkshire had bought more Apple shares during the quarter. In reality, Apple ended up being one of the smallest purchases (523,000 shares for an estimated $107 million) for the insurer during the period, with Berkshire dedicating close to $14 billion to the purchase of stocks of financial services firms--namely narrow-moat Bank of America (198.2 million shares for an estimated $5.7 billion), narrow-moat JPMorgan Chase (35.7 million shares for around $3.9 billion), wide-moat US Bancorp (24.3 million shares for about $1.3 billion), narrow-moat Goldman Sachs (5.1 million shares for an estimated $1.1 billion), no-moat PNC Financial (6.1 million shares for around $826 million), wide-moat Bank of New York Mellon (13.0 million shares for about $685 million), and narrow-moat Travelers Companies (3.5 million shares for some $447 million). Of those names, JPMorgan Chase, PNC Financial and Travelers were new to Berkshire's equity portfolio.

Other purchases included a new $2 billion stake in wide-moat Oracle, and smaller purchases of additional shares of Delta Air Lines and General Motors. These purchases were offset in part by the elimination of Berkshire's stakes in Walmart and Sanofi Aventis, as well as sales of shares of Phillips 66 (which netted an estimated $2.2 billion), Wells Fargo, United Continental, American Airlines Group, Southwest Airlines and Charter Communications (some of which were ongoing adjustments to keep Berkshire's total ownership stake below 10%).

These changes in the portfolio, as well as market movements, during the September quarter had a slight impact on Berkshire's top stock holdings. At the end of the third quarter, the company's top 5 positions--Apple (25.8%), Bank of America (11.7%) Wells Fargo (10.5%), Coca-Cola (8.4%) and Kraft Heinz (8.1%)--accounted for 64.5% of its $221.0 billion portfolio (down from 65.9% at the end of the second quarter, when the stock portfolio had an ending balance of $195.6 billion). Meanwhile, the insurer's top 10 holdings--which now includes American Express (7.3%), US Bancorp (3.0%), Moody's (1.9%), Goldman Sachs (1.9%) and JPMorgan Chase (1.8%)--accounted for 80.3% of the portfolio (versus 82.0% previously).