Andrew Bary

Berkshire Hathaway probably sold financial stocks in the first quarter, the conglomerate's securities filings indicate.

Investors should find out which stocks Berkshire bought and sold when Warren Buffett's company files its 13-F report of its equity holdings for the first quarter, likely on Thursday. Candidates for sale include the company's holdings in Bank of America, Citigroup, and Capital One Financial.

The quarterly 13-F, which Berkshire and other big institutional holders of stocks must file with the Securities and Exchange Commission, shows the companies' investments in U.S.-listed equities. The filings are due 45 days after the end of each quarter, and Berkshire normally waits until the last possible date to make its filing.

That is Thursday, May 15, for the first-quarter activity.

Barron's projection of Berkshire's sales is based on information in its recently 10-Q report for the first quarter, released on May 3, which showed the changes in the cost basis of different categories of stocks. While the report didn't disclose which individual stocks that Berkshire bought and sold in the period. Buffett & Co. did provide some clues to their activity.

Berkshire bought $3.2 billion of stocks and sold $4.7 billion, according to the 10-Q.

The company also breaks down its equity holdings into three buckets: financial; consumer; and a category called commercial, industrial, and other. Berkshire shows the cost basis, net unrealized gains, and fair value of each group of stocks.

The finance category is the only category that showed a decline in cost basis in the period. That indicates a sale of financial stocks because if Berkshire sold the shares, its original cost would be lower. Just to take an example. If an investor owns 1,000 shares of stock with a cost basis of $100 a share, the total cost basis is $100,000. If 100 shares are sold, the cost basis becomes $90,000, regardless of the current price of the stock.

The finance category cost basis was down $1.4 billion from the fourth quarter while the other two increased by a combined $3 billion in the first quarter.

The higher cost basis on these two categories indicates Berkshire likely held steady its position of 300 million shares of Apple, the company's largest equity holding at about $63 billion, in the first quarter.

Citigroup and Bank of America are candidates for possible sale because Berkshire reduced its stakes in those companies during the fourth quarter. Buffett, who oversees about 90% of Berkshire's $300 billion equity portfolio, often sells stocks over more than one quarter if he decides to trim or exit an equity holding.

Berkshire cut its stake in Bank of America by 15% in the fourth quarter to 680 million shares, continuing what has been a total reduction of over 30% since Berkshire began cutting the stake last July. In addition, Berkshire realized $3.1 billion of gains in the first quarter on equity sales, according to the 10-Q. That suggests some sizable gains relative to Berkshire's cost basis were realized, strengthening the case for Bank of America as a potential candidate for sales in the period.

The logic is that Berkshire likely has big unrealized gains in its Bank of America investment because the bulk of its original holding consisted of 700 million shares bought via warrants at around $7 a share in 2017. Bank of America now trades around $45, near its average price in the first quarter.

Berkshire sold 75% of its stake in Citigroup in the fourth quarter, leaving a holding of 14.6 million shares. Berkshire also reduced its holding in Capital One Financial by around 20% to 7.5 million shares.

Other financial stocks in the portfolio include American Express, Visa and Mastercard. Berkshire didn't change its holdings in those stocks in the fourth quarter. The company would have needed to disclose promptly any changes to its Amex investment via a Form 4 filing with the SEC because it holds more than 10% of the charge-card issuer.

The 13-F filing also likely will show what stocks Berkshire bought in the period. The total buys were around $3 billion.

It's possible that some of the equity moves were made by Berkshire investment managers Todd Combs and Ted Weschler, who together control about 10% of the equity portfolio. They often act independently of Buffett. Smaller holdings under $2 billion to $3 billion are often theirs rather than Buffett's.

Non-U. S. holdings, such as Berkshire's investments in five Japanese trading companies, aren't included in the 13-F report.

Berkshire stopped reporting the size of its five largest equity holdings in its 10-Q in the first quarter. That information had allowed investors to figure out the size of the five largest equity investments, which are Apple, Bank of America, Coca-Cola, American Express, and Chevron.

Write to Andrew Bary at andrew.bary@barrons.com

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May 14, 2025 16:25 ET (20:25 GMT)

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