Buffett's Berkshire Adjusts: Cuts Apple, Buys Chubb for $6.7B

Key Takeaway

• Berkshire Hathaway adjusted its portfolio, trimming Apple by 13% and reducing Chevron holdings, while slightly increasing its stake in Occidental Petroleum.
• Revealed a $6.7 billion investment in Chubb Ltd., marking a significant move into the insurance sector, with Chubb's stock jumping up to 9.9% after-hours.
• Despite portfolio adjustments, Buffett maintains high regard for Apple and anticipates Berkshire's cash reserves could reach $200 billion by quarter-end.

Berkshire's Strategic Moves

Warren Buffett's Berkshire Hathaway Inc. has made notable adjustments to its investment portfolio in the first quarter, as revealed in a recent regulatory filing. The Omaha-based conglomerate increased its stake in Occidental Petroleum slightly while reducing its Chevron holdings, continuing its trend of adjusting energy sector investments. Additionally, Berkshire Hathaway trimmed its Apple Inc. stake by 13%, a decision Buffett attributed to tax strategy considerations amidst substantial gains from the investment. Despite these changes, the top 10 holdings of Berkshire remained largely unchanged. The conglomerate also reduced its stake in Louisiana-Pacific, a building materials manufacturer, by about 6% and exited its investment in HP entirely. Furthermore, Buffett disclosed at Berkshire’s annual meeting that the company had sold its entire stake in Paramount at a loss.

Berkshire Unveils Chubb Investment

In a significant reveal, Berkshire Hathaway announced a $6.7 billion stake in insurer Chubb Ltd., ending months of speculation about its undisclosed investment in a financial firm. This stake, built since 2023 and kept confidential until now with the SEC's approval, highlights Berkshire's continued interest in the insurance sector. Chubb's stock responded positively to the news, jumping as much as 9.9% in after-hours trading. The investment in Chubb, a leading property-casualty insurer with global operations, aligns with Berkshire's extensive experience in the insurance industry, including ownership of companies like Geico and National Indemnity.

Portfolio Adjustments Reflect Broader Strategy

The adjustments to Berkshire Hathaway's portfolio, including the reduction in Apple Inc. shares and the acquisition of a significant stake in Chubb Ltd., reflect a broader strategic realignment. Despite trimming its Apple stake, Buffett has expressed continued admiration for the company, indicating it will remain Berkshire's largest investment barring dramatic changes. These portfolio decisions come as Berkshire's cash reserves reached a record $189 billion at the end of March, with Buffett suggesting it could hit $200 billion by the end of the current quarter. The strategic moves, including the shift in energy sector investments and the new stake in Chubb, demonstrate Buffett's nuanced approach to investment and anticipation of market trends.

Management Quotes

• Warren Buffett:

  "He said he sold a portion of the large stake for tax reasons after reaping enormous gains."
  "He implied the sale could be a means of avoiding an even higher tax bill down the road if tax rates rise to help plug a ballooning U.S. fiscal deficit."
  "Buffett told shareholders at Berkshire’s annual meeting earlier this month that he dumped the Paramount stake entirely at a loss."