10 Stocks Warren Buffett Is Selling (And 4 He's Buying)

U.S. Bancorp

• Action: Reduced stake
• Shares held: 126,417,887 (-1% from Q2 2021)
• Value of stake: $7.5 billion

U.S. Bancorp (USB, $60.46) is the nation's fifth-largest bank by assets and America's biggest regional bank. It's also one of the oldest Buffett stocks in the Berkshire Hathaway portfolio; the Oracle of Omaha initiated his position in the first quarter of 2006.

Buffett is notoriously tight-lipped about U.S. Bancorp and, at least historically speaking, has rarely touched the position. But he clipped it by another 1% in Q3, or by 2.5 million shares, following trimmings of 0.6% and 1.1% in Q2 and Q1, respectively.

Scraping just a bit off the USB stake for three consecutive quarters stands in stark contrast to what Buffett has done with so many of Berkshire's other bank stocks over the past year or so. Indeed, he mostly has taken a hatchet to his financial-sector holdings. And it's not like the regional lender's returns have justified holding on when Buffett has abandoned so many of its peers.

True, USB's total return beats the broader market by 6.6 percentage points so far in 2021, but it lags considerably over the past three-, five-, 10- and 15-year periods.

U.S. Bancorp shareholders no doubt appreciate Berkshire's vote of confidence. The holding company's 8.5% stake makes it the largest institutional shareholder, ahead of Vanguard (7.3%) and BlackRock (6.3%).

Visa

• Action: Reduced stake
• Shares held: 9,562,460 (-4% from Q2 2021)
• Value of stake: $2.1 billion

Warren Buffett, analysts and hedge fund managers are all big fans of Visa (V, $212.30), the world's largest payments processor, thanks to the runaway growth in digital mobile transactions globally. The pandemic actually accelerated businesses' and consumers' interest in cashless transactions, no doubt thanks to the perception that paper bills are "dirty."

But as bright as Visa's growth prospects might be, that didn't prevent Buffett from slightly reducing BRK.B's exposure to the Dow stock during the third quarter. The holding company reduced its stake by 4%, or 425,000 shares, bringing its total ownership down to 0.6% of Visa's shares outstanding.

Berkshire's remaining stake of 9.6 million shares was worth $2.1 billion as of Sept. 30 and accounted for 0.7% of its total portfolio value. That's down from 0.8% at the end of Q2.

Berkshire Hathaway first bought Visa in the third quarter of 2011, and Buffett admits it was actually the idea of lieutenants Todd Combs and/or Ted Weschler. Buffett won't say who the responsible party was, but he has said he wishes it was his own stock pick, and that Berkshire had bought even more.

"If I had been as smart as Ted or Todd, I would have (bought Visa)," Buffett told shareholders at the 2018 annual meeting.

Mastercard

• Action: Reduced stake
• Shares held: 4,288,648 (-6% from Q2 2021)
• Value of stake: $1.5 billion

As with Visa, Mastercard (MA, $361.36) was the idea of lieutenants Todd Combs and/or Ted Weschler (Buffett won't tell). And like Visa, Buffett wishes Berkshire had bought more.

And again, just as with Visa, Berkshire Hathaway reduced its exposure to Mastercard in Q3. The holding company cut its stake by 6%, or 276,108 shares, bringing its total holdings down to 4.3 million. The stake, worth $1.5 billion as of Sept. 30, accounts for 0.5% of Berkshire Hathaway's equity portfolio, down incrementally from the second quarter.

Mastercard is another bet on the global growth of digital transactions, and it too is a Wall Street and hedge fund darling. Analysts credit MA's long-term outperformance to its "powerful brand, vast global acceptance network and strong business model." Substantial barriers to entry, thanks to Mastercard's massive scale, global reach, security and data management skills, information intelligence and trust, have also served it well.

Shares in Mastercard and Visa have lagged the performance of the broader market in 2021, hurt in part by uncertainty created by the pandemic. The spread of COVID-19 greatly curtailed cross-border spending, as well as billings related to travel and entertainment.

Bristol Myers Squibb

• Action: Reduced stake
• Shares held: 22,046,936 (-16% from Q2 2021)
• Value of stake: $1.3 billion

Warren Buffett reversed course on Bristol Myers Squibb (BMY, $59.62) for a third consecutive quarter, cutting Berkshire Hathaway's stake by another 16% in Q3.

Buffett shed 4.2 million shares in the pharmaceutical giant over the three months ended Sept. 30. The haircut followed a 15% reduction in the second quarter and a 7% cut in Q1. That represents a 180 for Berkshire Hathaway, which first bought in Q3 of last year and bulked up its position in Q4.

The moves come as part of a general retreat by Berkshire Hathaway's on bets in the pharmaceutical sector. In the case of BMY, its late 2019 acquisition of pharmaceutical giant Celgene was thought to be a big part of Buffett's attraction to the stock. The deal brought in a pair of blockbuster multiple myeloma treatments: Pomalyst and Revlimid, the latter of which also treats mantle cell lymphoma and myelodysplastic syndromes.

A long track record of successful acquisitions has kept the pharma company's pipeline primed with big-name drugs over the years. But if the past three quarters of selling are any indication, Buffett seems to have reset his expectations for BMY – and the broader sector – going forward.

BMY now accounts for 0.4% of Berkshire Hathaway's portfolio value, down from 0.6% in Q2.

Charter Communications

• Action: Reduced stake
• Shares held: 4,200,626 (-19% from Q2 2021)
• Value of stake: $3.1 billion

Charter Communications (CHTR, $692.91) seems to have lost some of its shine for Warren Buffett over the past few years. The company, which markets cable TV, internet, telephone and other services under the Spectrum brand, is America's second-largest cable operator behind Comcast (CMCSA). It greatly expanded its reach in 2016 when it acquired Time Warner Cable and sister company Bright House Networks.

And yet Buffett slashed BRK.B's stake by nearly a fifth over the three months ended Sept. 30. The holding company sold more than 1 million shares in Charter, bringing its total ownership in the firm down to 2.3% of its shares outstanding, from 2.9% as of the end of Q2.

The sales also significantly reduced CHTR's position in Berkshire Hathaway's portfolio. It now accounts for 1% of the holding company's total equity investments, down from 1.3% at the end of Q2.

Buffett entered CHTR in the second quarter of 2014, but cut the stake in 2017 and again in 2020.

AbbVie

• Action: Reduced stake
• Shares held: 14,398,488 (-29% from Q2 2021)
• Value of stake: $1.6 billion

Buffett first bought AbbVie (ABBV, $116.84) in the third quarter of 2020 as part of a wider bet on the pharmaceutical industry. But Berkshire has cooled on the position, cutting into it for three consecutive quarters.

The holding company sliced another 29% off its ABBV stake in Q3, unloading 6.1 million shares. That follows a reduction of 10%, or 2.3 million shares, in Q2, as well as a 10% cut to the position in Q1. AbbVie now accounts for 0.5% of Berkshire's equity portfolio, down from 0.8% at the end of Q1.

The pharma giant is best known for blockbuster drugs such as Humira and Imbruvica, but analysts are also optimistic about the potential for its cancer-fighting and immunology drugs.

Another thing that puts ABBV among classic Buffett stocks is the biopharma firm's storied dividend history. AbbVie is an S&P 500 Dividend Aristocrat, by virtue of having raised its dividend every year for 50 years. The most recent hike – an 8.5% increase to the quarterly payment to $1.41 per share – was declared in October 2021.

Marsh McLennan

• Action: Reduced stake
• Shares held: 2,741,755 (-34% from Q2 2021)
• Value of stake: $415.2 million

Berkshire Hathaway cut its stake in Marsh McLennan (MMC, $167.35) by more than a third in the most recent quarter, following up on a reduction in Q2. The sales mark a reversal of the previous two quarters in which Berkshire initiated and then grew his stake in the insurance company.

Berkshire has plenty of insurance exposure in its core operations, including Geico, General Re, MLMIC Insurance and Berkshire Hathaway Specialty Insurance, among others. But up until recently, the industry has never been a major factor in its equity portfolio. In fact, Buffett dumped what little of his Travelers (TRV) stake remained in early 2020.

The wind had changed direction for a couple quarters. Berkshire initiated a 4.2 million-share position in MMC worth just short of half a billion dollars during Q4 2020. It wasn't a major position, at just 0.2% of the total value of Berkshire's equity holdings. But by virtue of another 1 million shares or so purchased in Q1 2021, the stake had increased by 23% in just a few short months.

Cut to today, however, and Berkshire spent Q3 reducing the stake by 34% – after unloading a fifth of the Marsh McLennan position in Q2. The remaining 2.7 million shares in MMC were worth $415.2 million as of Sept. 30, or a little more than 0.1% of Berkshire’s equity portfolio.

Merck

• Action: Exited stake
• Shares held: 0
• Value of stake: $0

Buffett completely sold out of Berkshire Hathaway's position in pharmaceutical giant Merck (MRK, $83.69) in Q3, which should come as a surprise to no one.

After all, Buffett slashed his position in the Dow stock by more than half in Q2. And that followed a first-quarter scything of 10.8 million shares, or 38% of the holding company’s stake at that time.

The sales are in keeping with Buffett's recent retreat in pharmaceutical stocks. But MRK has other company-specific concerns, too.

Central to Merck's fundamental performance is Keytruda, a blockbuster cancer drug approved for more than 20 indications. Keytruda is on patent only until 2028, however. Additionally, some of MRK's key brands start losing marketing exclusivity in 2022.

Merck also recently spun off its Organon (OGN) women's health business to shareholders. Some analysts criticized the spinoff because it makes MRK even more dependent on Keytruda and a few other select best-selling drugs.

It’s just as well. The Merck stake, at just 0.2% of Berkshire Hathaway's portfolio, had become an afterthought, anyway.

Organon

• Action: Exited stake
• Shares held: 0
• Value of stake: $0

Buffett exited the holding company's stake in Organon (OGN, $33.38), which, as noted above, Berkshire came to own by way of a Merck spinoff to shareholders in Q2.

The stake of 1.6 million shares was essentially immaterial to Berkshire Hathaway, comprising no more than 0.02% of its equity portfolio.

Liberty Global Class C Shares

• Action: Exited stake
• Shares held: 0
• Value of stake: $0

Warren Buffett continued to streamline his investments in John Malone-backed businesses in Q3. Berkshire Hathaway sold its remaining rump stake of Liberty Global Class C shares (LBTYK, $29.14). The 1.9 million shares comprised just 0.02% of the holding company's equity portfolio value.

Liberty Global bills itself as the world's largest international TV and broadband company, with operations in seven European countries. And the company – represented via Class A (LBTYA) and Liberty Global Class C Shares shares – was one of Berkshire's bets on communications and media companies whipped up by billionaire dealmaker John Malone.

Chevron

• Action: Added to stake
• Shares held: 28,703,519 (+24% from Q2 2021)
• Value of stake: $2.9 billion

It has been nearly impossible to get a bead on Buffett & Co.'s holdings in the energy sector over the past couple years.

Consider some of Uncle Warren's moves over the past few years:

• Q4 2019: Sold off most of his Phillips 66 (PSX) position, but added more than 150% to his Occidental Petroleum (OXY) stake, and nearly 40% to a Suncor (SU) stake.
• Q1 2020: Fully exited Phillips 66.
• Q2 2020: Bailed out of his Occidental position, but upped Suncor by 28%.
• Q4 2020: Initiated a position in Chevron (CVX, $116.82), but dropped more than a quarter of the Suncor position.
• Q1 2021: Exited Suncor, sold more than half the Chevron position.

And now, after making another small trim to CVX during the second quarter of this year, Buffett came back and added nearly 29 million more shares, or 24% to his existing Chevron stake.

It's funny. When Berkshire initiated its 48 million-share, $4.1 billion position in Chevron, the integrated energy major had the makings of a classic Buffett stock, in the same vein as Coca-Cola (KO) and American Express (AXP). CVX checks off a lot of Buffett boxes, after all. It's a well-known American brand – one that fits very neatly into the value camp as of late last year. And it offers an outsized dividend that still yields 4.6% after a 38% gain in 2021.

But it's hard to tell whether Buffett will hang on like he has with KO and AXP. For now, CVX makes plenty of sense given an improved outlook for oil and gas as the world recovers from the depths of the pandemic.

Liberty Sirius XM Group Series A

• Action: Added to stake
• Shares held: 20,207,680 (+35% from Q2 2021)
• Value of stake: $1.0 billion

Berkshire technically has three different investments in satellite-radio leader Sirius XM Holdings (SIRI). Not only does it hold a slug of SIRI shares – it also has positions via two different tracking stocks: Liberty Sirius XM Group Series A (LSXMA, $55.74) and Liberty Sirius XM Group Series C (LSXMK) tracking stock.

Liberty Media has for years held a large stake in Sirius XM Holdings. But in 2015, the company actually recapitalized, offering (among other things) several tracking stocks that allowed investors to participate in the performance of Liberty's Sirius XM investment directly rather than get it piecemeal through Liberty Media itself.

While that stake has largely been left alone over the past few quarters, Buffett decided to amplify his Sirius bet by tacking on another 20 million or so shares of LSXMA, or a 35% bump from the second quarter of 2021.

Berkshire is the largest institutional shareholder in each of the tracking stocks, holding 15.3% of Liberty Sirius XM's C shares and 19.2% of the A shares.

Floor & Decor Holdings

• Action: New stake
• Shares held: 816,863
• Value of stake: $98.7 million

Warren Buffett initiated a stake in Floor & Decor Holdings (FND, $130.00) in Q3, which is very much in keeping with some of his other investments in home retail. Floor & Decor sells hard surface flooring and related accessories primarily through 133 company-operated warehouse store formats.

Buffett bought more than 816,000 shares in the company worth almost $99 million as of Sept. 30. It's a small position, to be sure, accounting for a meager 0.03% of Berkshire Hathaway's total portfolio value. But it still fits nicely with some of Buffett's other holdings and investments.

Berkshire Hathaway, for example, has been building a position in home goods retailer RH (RH) – formerly known as Restoration Hardware – since the third quarter of 2019. And he's made no secret of his love for Berkshire Hathaway's wholly-owned subsidiary Nebraska Furniture Mart.

Floor & Decor thus appears to be a way to play the housing market, albeit with a somewhat oblique, Buffett-style angle.

Royalty Pharma

• Action: New stake
• Shares held: 13,145,902
• Value of stake: $475.0 million

Healthcare typically hasn't represented a large percentage of Berkshire Hathaway's assets, but the holding company usually maintains positions in several of the sector's names. That's still the case following BRK.B's exits in Merck and Organon, as Buffett & Co. have decided to add Royalty Pharma (RPRX, $41.70) into the fold.

That said, RPRX isn't your usual pharmaceutical play.

Royalty Pharma, as the name might indicate, is focused on acquiring biopharmaceutical royalties. It doesn't research or develop drugs – it helps provide capital for the companies that do. As the company explains:

"We fund innovation in the biopharmaceutical industry both directly and indirectly – directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators."

Through that model, RPRX has gotten a piece of blockbuster drugs such as AbbVie's Imbruvica, Biogen's (BIIB) Tysabri and Pfizer's (PFE) Xtandi.

Buffett spent $475 million to initiate a stake in RPRX during the third quarter, immediately making him a top-10 shareholder with 3.1% of all shares held. But it's still a relatively meager position within the Berkshire Hathaway portfolio, at less than 0.2% of equity assets.