Finance
Warren Buffett’s Berkshire Hathaway scoops up Occidental and other stocks during sell-off
Warren Buffett poses with Martin, the Geico gecko, ahead of the Berkshire Hathaway Annual Shareholder’s Meeting in Omaha, Nebraska on May 3rd, 2024.
David A. Grogan | CNBC
Warren Buffett went on bit of a shopping spree in the stock market before Christmas, picking up shares of Occidental Petroleum among others during a swift December sell-off.
Berkshire Hathaway purchased additional 8.9 million shares in the Houston-based energy producer for $405 million through transactions Tuesday, Wednesday and Thursday, pushing its stake above 28%, according to a regulatory filing late Thursday night.
During the same time frame, the Omaha-based conglomerate also bought about 5 million shares of Sirius XM for around $113 million as well as about 234,000 shares of VeriSign for roughly $45 million. These two stakes are much smaller in size, so these transactions could be made by Buffett’s investing lieutenants Todd Combs and Ted Weschler.
All told, Berkshire bought over $560 million worth of stocks over the last three sessions.
The 92-year-old legendary investor appeared to have taken advantage of a broad market pullback that made these stocks much cheaper.
Occidental shares have dropped more than 10% this month, bringing its 2024 losses to 24%. The energy company, once known for being founded by legendary oilman Armand Hammer, is Berkshire’s sixth-biggest equity holding. Buffett has ruled out a full takeover.
Occidental Petroleum
The sell-off in Sirius XM has been more dramatic. The New York-based satellite radio company is currently in its six-day losing streak, falling 23% this month and 62% this year.
Berkshire started hiking this bet after billionaire John Malone’s Liberty Media completed its deal in early September to combine its tracking stocks with the rest of the audio entertainment company. Now, Berkshire’s stake has risen to about 35%. SiriusXM has been grappling with subscriber losses and unfavorable demographic shifts.
Internet name VeriSign has also had a rough year with its stock down 6% in 2024, significantly underperforming the tech sector. Berkshire first bought the tech stock in 2013 and hasn’t adjusted the stake in years.
It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.
Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.
“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.“
According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.
“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”
As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.
The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.
Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.
“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”
Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.
T. Rowe Price U.S. Equity Research ETF vs. S&P 500
‘Some form of bear market’
Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.
“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”
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