Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) has released its fourth-quarter 2023 13F regulatory filing. The report indicates that Berkshire wasn’t a big buyer of stocks last quarter. That’s not surprising, given that stocks skyrocketed during the period: The Morningstar US Market Index was up about 12% during the fourth quarter.
Here’s a look at some of the stocks that Warren Buffett and his team bought and sold during the fourth quarter, as well as several of the most undervalued Buffett stocks to buy in Berkshire Hathaway’s portfolio today.
Berkshire Hathaway’s fourth-quarter 13F didn’t indicate that Buffett added any new names to the publicly traded portfolio. According to the report, Berkshire simply added to existing positions in Chevron (CVX), Occidental Petroleum (OXY), and Sirius XM Holdings (SIRI).
However, it’s what Berkshire Hathaway didn’t report that has the financial media abuzz, Morningstar strategist Greggory Warren explains.
“The SEC occasionally permits confidential treatment for new stock purchases by large portfolio managers, exempting them required disclosure in quarterly 13F filings when ‘such action is necessary or appropriate in the public interest and for the protection of investors or to maintain fair and orderly markets’.
“Berkshire received an exemption last quarter (much as it has at different times in the past), as well as for the third quarter of 2023, and now its biggest stock purchase during the third and fourth quarters remains a mystery to investors. Eventually, the company will disclose the stock (or stocks) that they have been buying,” he says.
Notably, Berkshire trimmed its position in Apple (AAPL) during the quarter. But despite the haircut, Apple stock remains Berkshire’s top holding – by a landslide. Buffett and his team slashed their positions in HP (HPQ) and Paramount Global (PARA). Berkshire entirely sold out of its positions in D.R. Horton (DHI), Globe Life (GL), Markel Group (MKL), and StoneCo (STNE).
4 Warren Buffett Stocks to Consider
Many of the publicly traded stocks held by Berkshire Hathaway are fairly valued or overvalued today, according to Morningstar’s metrics. Here are some of the stocks among its holdings in the latest quarter that looked undervalued as of February 13, 2024.
• Charter Communications (CHTR)
• Citigroup (C)
• Kraft Heinz (KHC)
• Kroger (KR)
Here’s a little bit about why we like each of these stocks at these prices, along with some key metrics for each. All data is as of February 13.
Charter Communications
• Morningstar Rating: 5 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Capital Allocation Rating: Standard
• Industry: Telecom Services
Berkshire Hathaway owns about 2.6% of Charter Communications’ stock. The company is the result of a 2016 merger of three cable companies: Legacy Charter, Time Warner Cable, and Bright House Networks. We think the company has carved out a narrow economic moat, thanks to its efficient scale and cost advantage. Charter Communications stock currently trades a whopping 47% below our $550 fair value estimate.
Citigroup
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: None
• Morningstar Capital Allocation Rating: Standard
• Industry: Banks – Diversified
Citigroup isn’t Berkshire Hathaway’s favourite bank: That honour goes to Bank of America (BAC), which is one of the top holdings in Berkshire’s publicly traded portfolio. But Citigroup stock is more attractive from a valuation perspective today, according to Morningstar. Citigroup stock currently trades 20% below our $66 fair value estimate.
Kraft Heinz
• Morningstar Rating: 5 stars
• Morningstar Economic Moat Rating: None
• Morningstar Capital Allocation Rating: Standard
• Industry: Packaged Foods
Berkshire Hathaway owns more than 26% of Kraft Heinz’s stock. The packaged-foods manufacturer has revamped its road map and is now focused on consistently driving profitable growth. We think Kraft Heinz stock is worth $53 per share, and shares are trading at a 32% discount to that fair value today.
Kroger
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Grocery Stores
Berkshire Hathaway owns about 7% of Kroger’s outstanding shares. Kroger and rival Albertsons (ACI) have announced merger plans, though regulatory hurdles persist. We think Kroger has carved out a narrow economic moat and is run by a management team that has done an exemplary job of allocating capital. Kroger stock trades 14% below our $53 fair value estimate.
More About Warren Buffett Stock Picks
Warren Buffett has said that he doesn’t consider himself to be a stock-picker; instead, he’s a company-picker. That comment pretty much encapsulates how he thinks about stocks: they’re parts of businesses. Learn more about how the Oracle of Omaha chooses companies to buy in How to Invest Like Warren Buffett. And, read the words of wisdom in 12 Lessons on Money (And Life) from Buffett and Munger.
