🛍 Buffett and Burry went shopping

What’s going on here?

Warren Buffett's Berkshire Hathaway sold ten million Apple shares last quarter, presumably determined not to let one bad stock ruin the whole bunch.

What does this mean?

Buffett first joined the legions of Apple aficionados in 2016, buying shares that turned out to be among his best, now making up around a fifth of Berkshire’s entire portfolio. And while Buffett did sell some of that stock a few years back, he said the decision was “probably a mistake” in 2021. One worth repeating, apparently, because Buffett just revealed that he trimmed around 1% of his Apple shares toward the end of last year. Mind you, that means Berkshire’s still the proud owner of a 5.9% stake, worth roughly $167 billion. The Oracle of Omaha was more ruthless elsewhere, slashing Berkshire’s stakes in HP and Paramount by 78% and 32% respectively and ditching eight companies completely during the year, including General Motors, UPS, and Procter & Gamble.

Why should I care?

For markets: The Apple fell a little far from the tree.

Apple handed Microsoft the accolade of the most valuable US company earlier this year, after regulators started scrutinizing App Store policies and sales slipped in China – one of the firm’s biggest markets. Now, investors haven’t ditched the favorite of their five-a-day just yet, but if Apple can’t shake off those qualms, they may well get their fix elsewhere.

The bigger picture: Buffett’s tapped in.

Buffett stayed mum on any of Berkshire Hathaway’s brand-new additions, but he can’t hide his obvious penchant for the oil and gas sector. Berkshire Hathaway bought a bigger stake in industry giants Chevron and Occidental Petroleum during the final quarter of last year. Some psychic powers may have been at play: Shell predicted on Wednesday that the world will want 50% more liquified natural gas by 2040, as developing Asian countries – not least, China – tuck into the cleaner alternative to traditional fuel.

What’s going on here?

The rest of the world has been vexed by Chinese tech stocks, but “The Big Short” star Michael Burry proved that he doesn’t hold a grudge.

What does this mean?

Michael Burry tends to zig when everyone else zags, making him the sort of maverick that would inspire a star-studded feature film introducing technical trading to the masses. This time, his investment firm Scion Asset Management upped its stake in ecommerce giants Alibaba and JD.com by 50% and 60% respectively. That, at a time when most investors are cleaning their hands of Chinese stocks. Burry did fall in line when it came to US tech, mind you, stopping a bet against an exchange-traded fund that included Nvidia, and buying more shares in Alphabet and Amazon.

Why should I care?

For you: Time for show and tell.

Any investor that trades for clients and manages over $100 million has to show the US Securities and Exchange Commission their stateside stocks every quarter. That intel becomes the publicly available “13F filings”, which give the rest of the world a peek into where the rich and well-connected are investing. Any copycats need to have their wits about them, though. The dossier only shows stocks that trade on US exchanges and updates with a 45-day delay, so you don’t always get the full picture.

For markets: Buffett’s big belief.

Investors have been giving Chinese stocks a wide berth, sending them into a freefall that’s lasted since 2021. After all, with a seemingly endless property market crisis, hard-to-fix deflation, and mounting political tensions, the country hardly seems like a safe bet. Bear in mind, though, that Buffett has always said to “be greedy when others are fearful”. So if you believe that China just needs some time, this could be your chance to nab a bargain: even big-name stocks may now be selling at discounts too low to ignore.