Buffett Makes Big Bet on Big Pharma

  • As of the end of the third quarter, Buffett’s portfolio of 50 stocks has eight medical and health stocks.
  • Apple is still Buffett's largest holdings.
  • Among the top 20 largest holdings, Wells Fargo has the largest reduction in holdings.

CEO Warren Buffett submitted Berkshire Hathaway’s third-quarter position report to the US Securities and Exchange Commission on Monday night. The report shows that, in the third quarter, Buffett bought six new stocks, increased his holdings of four stocks, emptied one stock, and reduced hs holdings of ten stocks.

Warren Edward Buffett is an American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over US$78.9 billion as of August 2020, making him the world’s seventh-wealthiest person.

Berkshire Hathaway’s holdings are still highly concentrated, with the top ten heavy stocks portfolio accounting for 87.21%. It is worth noting that four of the six newly-purchased stocks include four biopharmaceutical stocks.

If the vision is broadened to the medical and health category, as of the end of the third quarter, Buffett’s portfolio of 50 stocks has eight medical and health stocks, with a total market value of $9.372 billion.

Buffett Trims Apple

Apple is still Buffett’s largest holdings. Although Buffett’s holdings of Apple’s shares at the end of the third quarter decreased by 3%, compared to the end of the second quarter, Apple’s share of Buffett’s portfolio was as high as 47.78% due to the rise in stock prices.

This is still an increase from the second quarter. As of the end of the three quarters, the market value of Apple held by him reached $109.359 billion.

Among the top 20 holdings, four stocks were newly purchased in the third quarter, namely, AbbVie, Merck, and Bristol-Myers Squibb. A fourth, Snowflake, is a newly-listed information technology company.

Among the top 20 largest holdings, Wells Fargo has the largest reduction in holdings. In the third quarter, Buffett’s holdings of Wells Fargo’s shares decreased by 46% compared with the end of the second quarter. After the reduction, Wells Fargo held $2.995 billion, making it the tenth largest stock in the portfolio.

Buffett has invested in Wells Fargo for decades, but in recent years Wells Fargo has had problems. The SEC issued an announcement in early November 2020, accusing John Stumpf, the former CEO of Wells Fargo, and Carrie Tolstedt, CEO of Community Bank, of misleading investments.

The SEC stated that these former executives misled investors about the bank’s common sales practices. Stumpf agreed to pay a fine of $2.5 million to settle these allegations, and the SEC will file fraud charges against Tolstedt in court.

Berkshire Hathaway is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States.

Buffett has shown unprecedented interest in biopharmaceuticals. Four of the six stocks newly opened this season are biopharmaceutical stocks. The four companies are all leading global pharmaceutical companies.

According to the 2020 TOP50 list of global pharmaceutical companies announced by the US “PharmExec” magazine in June 2020, Pfizer ranked 3rd among global pharmaceutical companies, 4th with Merck & Squibb, 5th with Bristol- Myers Squibb, and Ai Bervey ranked 8th.

It is understood that the ranking of the US “Pharmaceutical Manager” magazine is based on the revenue and profit of each company, and the list is more influential in the industry.

Cutting Positions in Financial Stocks

In the third quarter, Berkshire Hathaway only cleared one stock— a retail company opener. In the third quarter, Buffett’s shareholding in five companies decreased by more than 30% compared with the end of the second quarter, namely Wells Fargo, Barrick Gold, PNC Financial Group, JP Morgan Chase, and market openers. Among them, Barrick Gold was a newly-built stock in the second quarter.

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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