New Strategic Investments in Domino’s and Pool Corp
In the third quarter, Warren Buffett’s Berkshire Hathaway made notable portfolio adjustments, including significant investments in Domino’s Pizza and Pool Corporation, while reducing its stakes in prominent holdings like Apple and Bank of America. According to regulatory filings released on Thursday, the conglomerate acquired approximately 1.3 million shares of Domino’s Pizza, valued at nearly $550 million. Additionally, Berkshire purchased a 404,000-share stake in Pool Corp., worth around $152 million, positioning the pool supplier as a strategic addition to its portfolio. Following the announcement, both Domino’s and Pool Corp saw a boost in their share prices during after-hours trading.
These investments mark a selective approach to expanding Berkshire’s portfolio, indicating Warren Buffett’s interest in growth potential in consumer and seasonal markets. This move aligns with the broader trend in Berkshire’s current investment strategy, focusing on moderate acquisitions while unloading larger, longer-held assets.
Continued Reduction in Apple and Bank of America Stakes
One of the standout moves in Berkshire’s recent filings was the sale of 25% of its stake in Apple, a high-profile investment that has been a cornerstone of Berkshire’s portfolio. Although hints of the sale surfaced in Berkshire’s third-quarter earnings report earlier this month, the extent of the offload became clearer with Thursday’s filing. This latest sale has brought Berkshire’s stake in Apple from nearly $175 billion at the beginning of the year down to about $70 billion as of September. Despite this reduction, Apple still comprises around a quarter of Berkshire’s $266 billion equity portfolio, emphasizing its ongoing importance to the firm’s investment strategy.
Berkshire also offloaded a substantial portion of its Bank of America shares, selling approximately 235 million shares. As a major stakeholder with over 10% ownership, Berkshire is required to disclose such stock sales throughout the quarter, underscoring the transparency associated with its significant moves in the financial sector.
Strategic Exits and Adjustments
In addition to new investments and stake reductions, Berkshire fully divested from its position in Floor & Decor Holdings, after previously reducing its holdings in the company. Other adjustments in the quarter included a significant reduction in its stake in Ulta Beauty, with Berkshire selling over 95% of its holdings in the cosmetics retailer after a brief entry in the second quarter.
Warren Buffett also reduced holdings in Capital One Financial, Charter Communications, and fintech company Nu Holdings. However, Berkshire increased its investment in aerospace firm Heico Corp., purchasing an additional 5,445 shares to bring its total stake to about 1.05 million shares, valued at over $200 million.
These moves reflect Berkshire’s shift toward a more cash-focused approach, amassing a record $320.3 billion cash reserve in the third quarter, mostly allocated to short-term Treasury bills. By scaling back on long-held equities and making targeted new investments, Warren Buffett is signaling a cautious yet strategic approach in an uncertain market environment.
