The SEC requires all large investors to report any changes to their portfolio via a 13F filing. These filings are scrutinized by other investors and finance reporters to understand where well-known investors are allocating their capital. Buffet and Berkshire’s portfolio is always among the conversation.
After the first quarter, we found out that Warren did not make any big purchases. This was after a large market decline. More so, he sold his airline holdings (which he had owned for several years) indicating he was bearish on the long-term prospects of these businesses. He also did not buy back much of his own stock. This made the Buffett faithful as well as the investment community speculate if he was negative on the economy.
Let me draw a few parallels. The U.S. stock market was red hot from 1982-87. By early 1987, Warren has sold most of his equity holdings except three, which he considered his permanent holdings. He did not make any purchases after the October 1987 crash. He waited well into 1988 and then made a large bet of nearly 25% of Berkshire’s capital into one single company. It was “Coca Cola”, a stock he owns to this day. Therefore, what can we truly conclude from his inactivity in the first quarter of this year? Nothing. The time frame is too short to draw tangible conclusions.
The second-quarter report was filed last Friday. Warren continued to sell his bank holdings, held on to his Apple stock, and his sole new purchase was a Gold miner. Again, these moves created a lot of buzz. Fans of the yellow metal were happy that Buffett was finally in their camp. The anti-Buffett crowd was ecstatic that Buffett broke his rules. Buffett has disliked investments in commodities as they are unpredictable. This includes gold since it lacks utility and does not produce cash flow.
"If you bought gold at the time of Christ and you figured the compound rate on it, it may be a couple of tenths of 1%" — Berkshire annual meeting in 2018
The gold miner investment is .2% of the entire portfolio. In the big picture, it is irrelevant. It is likely an investment made by one of his lieutenants. It is unlikely that Buffett has changed his life-long opinion on gold at the age of 89. We may find out at the next annual meeting.
13F filings can offer signals in a world full of noise. However, speculating on these moves or copying them without context will likely do more harm than good to our own portfolios.