In this article, we discuss the 10 stocks Warren Buffett is selling.
Warren Buffett, the chief of Nebraska-based Berkshire Hathaway, is often referred to as the “Sage of Omaha” due to his incredibly successful value investing strategy that has returned, on average, more than 20% to investors over more than five decades, a feat unmatched on Wall Street in modern history.
In the last few months, Buffett, through Berkshire Hathaway, has been busy selling health and pharma stocks from his portfolio – four of the ten biggest percentage declines in the portfolio compared to the first quarter of 2021 are biotech companies. This kind of activity is not typical of Buffett, who usually buys and holds onto stocks for the long-term. Some of the top holdings of Berkshire Hathaway, like Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), and The Coca-Cola Company (NYSE: KO), have been in the portfolio for years.
At an annual shareholder meeting in 2015, Buffett outlined some of the reasons for his success, telling attendees that the best business to invest in was one where investors did not have to keep making reinvestments because the business itself became expensive as the value of the dollar dropped. Although the statement was made in the context of inflation, it applied to his larger strategy as well. The success of Buffett has been an exception in the world of big finance that has struggled to produce more investors like him.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, here is our list of the 10 stocks Warren Buffett is selling. These equities can help potential investors gain valuable insight into the investment philosophy of the Buffett-led firm and the outlook it has on the economy.
These were compiled using the investment portfolio of Berkshire Hathaway at the end of the second quarter of 2021. Only those companies were considered in which the fund has decreased stake as compared to the filings for the first quarter of the year. The percentage decreases are mentioned below.
Warren Buffett Is Selling These Stocks
10. U.S. Bancorp (NYSE: USB)
Number of Hedge Fund Holders: 41
Percentage Decline in Stake in Q2: 1%
U.S. Bancorp (NYSE: USB) is placed tenth on our list of 10 stocks Warren Buffett is selling. The company operates from Minnesota as a financial services holding firm. According to the latest filings, Berkshire Hathaway owned more than 128 million shares in the firm at the end of June. These represent 2.5% of the portfolio and are worth $7.3 billion. The firm has decreased stake in the financial services firm by 1% when compared to the filings for the first quarter of 2021.
On July 16, investment advisory Oppenheimer maintained an Outperform rating on U.S. Bancorp stock and raised the price target to $73 from $70, noting that the ongoing loan growth would help drive net interest income and revenue for the firm.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $8.30 billion in U.S. Bancorp, down from 43 the preceding quarter worth $8.33 billion.
Unlike Apple Inc., Bank of America Corporation, and The Coca-Cola Company, U.S. Bancorp is one of the stocks Warren Buffett is selling.
In its Q4 2020 investor letter, Mairs & Power, an asset management firm, highlighted a few stocks and U.S. Bancorp (NYSE: USB) was one of them. Here is what the fund said:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
9. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 50
Percentage Decline in Stake in Q2: 3%
Chevron Corporation (NYSE: CVX) is ranked ninth on our list of 10 stocks Warren Buffett is selling. The firm operates from California. It is in the oil, gas, and chemicals business. Latest data shows that Berkshire Hathaway owned over 23 million shares in the firm at the end of the second quarter of 2021. These are worth more than $2.4 billion and represent 0.82% of the portfolio. The firm has decreased stake in Chevron by 3% compared to the first quarter.
On July 23, investment advisory Piper Sandler reiterated an Overweight rating on Chevron Corporation stock and raised the price target to $137 from $126, underlining that the second quarter results for the oil and gas sector had been “unquestionably positive”
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Chevron Corporation, up from 41 in the preceding quarter worth $4.8 billion.
Unlike Apple Inc., Bank of America Corporation, and The Coca-Cola Company, Chevron Corporation is one of the stocks Warren Buffett is selling.
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and Chevron Corporation (NYSE: CVX) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
8. AbbVie Inc. (NYSE: ABBV)
Number of Hedge Fund Holders: 82
Percentage Decline in Stake in Q2: 11%
AbbVie Inc. (NYSE: ABBV) is an Illinois-based pharmaceutical company. It is placed eighth on our list of 10 stocks Warren Buffett is selling. Berkshire Hathaway owned more than 20 million shares in the firm at the end of June 2021, representing 0.78% of the portfolio. These are worth over $2.3 billion. The firm has slashed stake in the pharma company by 11% when compared to the first quarter of 2021.
On August 23, investment advisory Cowen kept an Outperform rating on AbbVie Inc. stock and raised the price target to $130 from $120, highlighting that the shares were attractively priced given the long-term visibility of pipeline drugs.
At the end of the second quarter of 2021, 82 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in AbbVie Inc., up from 72 in the preceding quarter worth $5.9 billion.
Unlike Apple Inc., Bank of America Corporation, and The Coca-Cola Company, AbbVie Inc. is one of the stocks Warren Buffett is selling.
7. General Motors Company (NYSE: GM)
Number of Hedge Fund Holders: 86
Percentage Decline in Stake in Q2: 11%
General Motors Company (NYSE: GM) is a Michigan-based company that makes and sells automotives. It is ranked seventh on our list of 10 stocks Warren Buffett is selling. Berkshire Hathaway owned 60 million shares in the firm at the end of the second quarter of 2021, representing 1.21% of the portfolio. The shares are valued at over $3.5 billion. The Buffett-led firm has slashed stake in the firm by 11% compared to the filings for the first three months of the year.
On August 5, investment advisory JPMorgan maintained an Overweight rating on General Motors Company stock with a price target of $77, noting that a post-earnings selloff of the shares seemed overblown.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in General Motors Company with 34 million shares worth more than $2 billion.
Unlike Apple Inc., Bank of America Corporation, and The Coca-Cola Company, General Motors Company is one of the stocks Warren Buffett is selling.
Junto Investments, in its Q4 2020 investor letter, mentioned General Motors Company (NYSE: GM). Here is what the fund has to say about General Motors Company in its letter:
“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”
6. Bristol-Myers Squibb Company (NYSE: BMY)
Number of Hedge Fund Holders: 73
Percentage Decline in Stake in Q2: 16%
Bristol-Myers Squibb Company (NYSE: BMY) is placed sixth on our list of 10 stocks Warren Buffett is selling. The firm operates from New York. It makes and sells biopharmaceutical products. According to regulatory filings, Berkshire Hathaway owned more than 26 million shares in the firm at the end of June 2021. These are worth $1.7 billion and represent 0.59% of the portfolio. The firm has trimmed stake in the company by 16% compared to the first quarter of the year.
On July 26, investment advisory Truist initiated coverage of Bristol-Myers Squibb Company stock with a Buy rating and a price target of $74, noting that the stock could trade at nine times expected earnings per share in 2022.
At the end of the second quarter of 2021, 73 hedge funds in the database of Insider Monkey held stakes worth $4.5 billion in Bristol-Myers Squibb Company, down from 81 in the preceding quarter worth $5.7 billion.
Unlike Apple Inc., Bank of America Corporation, and The Coca-Cola Company, Bristol-Myers Squibb Company is one of the stocks Warren Buffett is selling.
In its Q4 2020 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company (NYSE: BMY) was one of them. Here is what the fund said:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
5. Marsh & McLennan Companies, Inc. (NYSE: MMC)
Number of Hedge Fund Holders: 41
Percentage Decline in Stake in Q2: 21%
Marsh & McLennan Companies, Inc. is ranked fifth on our list of 10 stocks Warren Buffett is selling. The firm markets professional services and operates from New York. Regulatory filings reveal that Berkshire Hathaway owned over 4 million shares in the firm at the end of the second quarter of 2021, representing 0.2% of the portfolio. The shares are valued more than $590 million. The firm has decreased stake in the company by 21% compared to the first quarter of the year.
On August 16, investment advisory Wolfe Research initiated coverage of Marsh & McLennan Companies, Inc. stock with an Outperform rating and a price target of $171, citing that the firm could grow based on new hires.
Out of the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in Marsh & McLennan Companies, Inc. with 2.2 million shares worth more than $315 million.
4. Merck & Co., Inc. (NYSE: MRK)
Number of Hedge Fund Holders: 79
Percentage Decline in Stake in Q2: 49%
Merck & Co., Inc. is a New Jersey-based healthcare firm. It is placed fourth on our list of 10 stocks Warren Buffett is selling. According to the latest data, Berkshire Hathaway owned more than 9 million shares in the firm at the end of the second quarter of 2021, representing 0.24% of the portfolio. The shares are valued at more than $712 million. The Buffett-led firm has trimmed stake in the healthcare company by 49% compared to the first quarter of 2021.
On July 26, investment advisory Truist assumed coverage of Merck & Co., Inc. stock with a Buy rating and a price target of $92, underlining that the stock could trade at 15-times expected earnings per share in 2022.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Merck & Co., Inc. with 10.3 million shares worth more than $802 million.
In its Q1 2021 investor letter, Artisan Partners highlighted a few stocks and Merck & Co., Inc. (NYSE: MRK) was one of them. Here is what the fund said:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
3. Axalta Coating Systems Ltd. (NYSE: AXTA)
Number of Hedge Fund Holders: 47
Percentage Decline in Stake in Q2: 100%
Axalta Coating Systems Ltd. (NYSE: AXTA) is a Pennsylvania-based firm that makes and sells coating systems. It is ranked third on our list of 10 stocks Warren Buffett is selling. Latest filings reveal that Berkshire Hathaway has sold off its entire stake in the company during the second quarter.
On July 28, investment advisory Citi kept a Buy rating on Axalta Coating Systems Ltd. stock and raised the price target to $39 from $37, appreciating the solid quarterly results posted by the company.
At the end of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Axalta Coating Systems Ltd., up from 43 in the previous quarter worth $1.5 billion.
In its Q1 2021 investor letter, Ariel Investments highlighted a few stocks and Axalta Coating Systems Ltd. (NYSE: AXTA) was one of them. Here is what the fund said:
“While we did not exit any holdings during the quarter in Ariel Fund, we initiated a position in Axalta Coating Systems, Ltd. (AXTA) which is emerging from the shadow of its former parent, DuPont. We expect Axalta—a leading manufacturer of coatings for cars and trucks—to continue to gain market share from ongoing consolidation in its refinishing business and further margin improvement through cost savings programs.”
2. Biogen Inc. (NASDAQ: BIIB)
Number of Hedge Fund Holders: 67
Percentage Decline in Stake in Q2: 100%
Biogen Inc. (NASDAQ: BIIB) is placed second on our list of 10 stocks Warren Buffett is selling. The company operates from Cambridge as a biotechnology firm. According to the latest data, Berkshire Hathaway sold off its entire stake in the company between March and June this year.
On August 2, investment advisory Mizuho maintained a Neutral rating on Biogen Inc. stock and raised the price target to $300 from $244. Salim Syed, an analyst at the firm, issued the ratings update.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Biogen Inc., up from 63 in the preceding quarter worth $1.4 billion.
In its Q2 2021 investor letter, Longleaf Partners Fund highlighted a few stocks and Biogen Inc. (NASDAQ: BIIB) was one of them. Here is what the fund said:
“Biogen (52%, 1.24%), a biotechnology company specializing in therapies for the treatment of neurological diseases, contributed in a way that warrants a longer than usual writeup. When we first began buying the company in early January, the stock scored well on all three Business, People and Price criteria, but the range of outcomes was wider than most investments for us. On the business, while the company has had a leading position in neuroscience for decades, it had become a collection of assets that was hard for the stock market to value. This led to most short-term investors focusing on year-over-year (YOY) earnings declines in 2021 and pipeline uncertainty. We focused most on strong cash flows from Biogen’s Multiple Sclerosis franchise, a growing yet hidden biosimilars business, and a pipeline that we believed was actually quite interesting and diversified beyond the manic market focus on Aducanumab, a proposed treatment for Alzheimer’s. On the people front, we also liked what the board and management had been doing (large, discounted repurchases and prudent internal and external investments) and not doing (no big, dumb M&A or unsustainable dividends). Our single point appraisal was around $375/share, but we saw a range at the low end of slightly above $250 if the pipeline totally failed or approaching $500 if the company saw a reasonable amount of pipeline success. We also thought that we were effectively paying a very low double-digit multiple of FCF/share. It is important to note that we were not betting on our science expertise or any other predictions that fall outside our circle of competence. Rather, we used our bottom-up appraisal skills to find a security that was mispriced at that given moment – we had followed the company for over 10 years before our purchase – and that shorter-term investors were afraid to own due to the potential for near-term stock price volatility. We started with a partial position, as we felt the wider-than-usual range of outcomes and uncertainty around the stock could lead to the chance to fill it out at a better price later.
On June 7, the FDA approved Aducanumab (now known as Aduhelm) after a contentious process that has yet to fully play out. The stock shot upward, and our single point value increased to $425. With the stock trading at that level, we exercised our price discipline and sold our position. In this era of “multi-decade-compounders at any price” and given SAM’s history of being long term, it feels weird to be in and out of something so quickly. But it also feels OK to be able to use our appraisal skills to secure a payoff for our long-term clients. The company’s stock price has fallen since our sale, and we will continue to watch the price-to-value (P/V) gap going forward.”
1. Liberty Global plc (NASDAQ: LBTYA)
Number of Hedge Fund Holders: 30
Percentage Decline in Stake in Q2: 100%
Liberty Global plc (NASDAQ: LBTYA) is ranked first on our list of 10 stocks Warren Buffett is selling. The company operates from London as a communication services provider. Regulatory filings show that the Buffett-led firm sold off its entire stake in the company during the second quarter of 2021.
On June 23, investment advisory JPMorgan resumed coverage of Liberty Global plc (NASDAQ: LBTYA) stock with an Overweight rating and a price target of $37, noting that there was 40% upside potential in the shares.
At the end of the second quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $806 million in Liberty Global plc (NASDAQ: LBTYA), down from 35 in the preceding quarter worth 848 million.
You can also take a peek at 10 Stocks that Helped Warren Buffett Make $4.6 Billion in Dividends and 10 Best Dividend Stocks with Over 5% Yield According to Hedge Funds.
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This article is originally published at Insider Monkey.
