We recently published a list of Warren Buffett’s 10 New Stock Picks. In this article, we are going to take a look at where Chubb Limited (NYSE:CB) stands against other Warren Buffett’s new stock picks.
Warren Buffett is one of the few investors that do not require an introduction as his success, wealth and philanthropy are widely known and admired. Earlier this year, Buffett made it clear that his fortune, estimated at around $140 billion will go into a charitable trust that will be administered by his three children. Moreover, the trust will only be able to disburse funds upon unanimous agreement from all three children. In a recently-released letter to shareholders, Buffett explained:
“That restriction enables an immediate and final reply to grant-seekers: “It’s not something that would ever receive my brother’s consent.” And that answer will improve the lives of my children.”
However, in the meantime, Buffett still appears to be at the helm and running the operations at Berkshire Hathaway Inc (NYSE:BRK.A), even though he has handed over most of the day-to-day managing duties to his lieutenants. In the latest financial report, it was revealed that Berkshire has amassed a huge position in cash, cash equivalents and short-term investments in US Treasuries. The cash pile, which stands at $277 billion, is the largest that the holding company has ever had. Moreover, Berkshire has slowed down its stock buybacks and hasn’t bought any of its own shares in the third quarter.
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This has prompted many to speculate that Buffett sees the market as over-valued and is likely anticipating a downturn. In this way, gathering cash will allow Berkshire to purchase shares at cheaper prices. Another explanation might come from Buffett’s comments made at the annual meeting of Berkshire shareholders, where he said that he expected that capital gain taxes to go up, so realizing profits now might be way to save money later.
Nevertheless, Berkshire still maintains a portfolio of 40 stocks. Many of the companies that the fund owns are long-term holdings and you can take a look at some of them in our analysis of Warren Buffett’s 10 longest-held stocks.
Our Methodology
In-line with Buffett’s legacy, Berkshire holds a diversified portfolio and does not make a lot of changes during a quarter. Nevertheless, every quarterly 13F filing reveals two or three new positions acquired during the reporting period. To compile the list of Warren Buffett’s new stock picks, we have scanned through Berkshire’s filings for the last couple of years and have identified 10 stocks that Berkshire has acquired and still holds according to the latest filing.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of an insurance agent’s hand pointing to a marine insurance policy, highlighting the company’s expertise in marine coverage.
Chubb Limited (NYSE:CB)
Shares held by Berkshire Hathaway: 27.03 million
Stake Acquired: Q1 2024
Earlier this year, Berkshire initiated a position in Chubb Ltd (NYSE:CB), which was worth more than $6.7 billion as reported in the first-quarter 13F filing. Berkshire further added 1.1 million shares in the second quarter currently holding more than 27 million shares of the insurance company.
It’s no secret that Warren Buffett likes insurance companies, with Berkshire owning a number of them in its portfolio, including GEICO, Berkshire Hathaway Reinsurance Group, Berkshire Hathaway Specialty Insurance, among others. Buffett appreciates insurance businesses’ capital structure, which allows investing the premiums to accumulate more capital. Chubb Ltd (NYSE:CB) is a robust insurance company with a large presence, ranking among the top 20 global insurers. According to Insurance Information Institute, Chubb has a market share of 5.5% as of the end of 2023.
For the first nine months of 2024, the company reported a net Income of $6.70 billion, representing an increase of 14% over the year. The company also recorded a combined ratio (the difference between claims and expenses, and premiums earned) of 87.7% for the third quarter, which shows underwriting profitability. Moreover, Chubb Ltd. (NYSE:CB) saw a 12% increase in net premiums written to $13.4 billion compared to the third quarter of 2023.
Overall, CB ranks 5th on our list of Warren Buffett’s new stock picks. While we acknowledge the potential of CB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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