The recent sales of HP stock by Berkshire Hathaway have raised the question, “Was that investment—and the selling—done by CEO Warren Buffett or one of his two investment lieutenants, Todd Combs and Ted Weschler ?”
Some Berkshire Hathaway (ticker: BRK.B) watchers think the HP (HPQ) investment was made by Combs or Weschler because Buffett tends to shy away from technology investments, with Apple (AAPL) being the major exception.
叠补谤谤辞苍’蝉 view is that the HP investment and recent sales were made by Buffett rather than Combs or Weschler. Why? Combs and Weschler run pension-fund investments for Berkshire, and none of its pension funds hold HP stock.
Based on this pension-fund indicator, Berkshire holdings DaVita (DVA), Kroger (KR), Ally Financial (ALLY), Louisiana-Pacific (LPX), and RH (RH) likely were made by Combs and Weschler.
Some large Berkshire equity holdings associated with Buffett, including Occidental Petroleum (OXY) and Chevron (CVX), aren’t held by any pension funds run by Berkshire.
This matters to investors to the extent that Buffett has a superior long-term investment record, and his imprimatur matters when he makes an investment. Berkshire didn’t respond to a request for comment.?
Many investors assume that all of Berkshire’s investments are made by Buffett. Indeed, news organizations routinely write that Buffett bought or sold a particular stock when Berkshire did it. This annoys Buffett because Combs and Weschler also run money for Berkshire.
Berkshire had about $375 billion of equity investments at the end of the second quarter. About 90% of the total is run by Buffett, and the rest is managed by Combs and Weschler, who were brought in more than a decade ago to run part of the portfolio. They operate independently, and are expected to run the entire portfolio when Buffett, 93, is no longer CEO.
Berkshire doesn’t reveal which positions are Buffett’s and which are held by Combs and Weschler, although Buffett will occasionally comment on it. Buffett has said he gives them wide autonomy, and often learns of their investments after they’re made.
Buffett hasn’t revealed in recent years the investment performance of Combs and Weschler, with his most recent comment that 叠补谤谤辞苍’蝉 is aware of coming in 2019, when Buffett told CNBC that both had been slightly behind the S&P 500 index since joining Berkshire.
In his annual letter released in early 2022, Buffett wrote that Combs and Weschler manage about $34 billion. “Also, a significant portion of the dollars that Todd and Ted manage are lodged in various pension plans of Berkshire-owned businesses,” he added. Buffett didn’t disclose which Berkshire plans are handled by the pair.
The largest and longest-standing Berkshire investments probably are entirely or largely Buffett’s. These include Apple, Coca-Cola (KO), Bank of America (BAC), and American Express (AXP).
The debate about whether a Berkshire investment is Buffett’s, Combs’, or Weschler’s centers around the firm’s smaller holdings of $3 billion to $4 billion or less.
Berkshire accumulated the HP holding in early 2022, amassing a 12% stake, some 120 million shares worth about $4 billion at the time. Berkshire has been steadily selling down the shares in the past month—likely at a loss, we estimate—and now holds about 100 million shares.
The clues to whether Buffett owns a particular Berkshire equity holding come in some of the firm’s regulatory filings, including those involving its holdings exceeding 5% of the company’s outstanding shares. These break down the Berkshire entities that own the stock. Berkshire’s equity holdings are distributed across a range of its units, mostly insurers. They include National Indemnity, its big property and casualty insurer, and Geico, the auto insurer, as well as pension funds such as the Berkshire Hathaway Consolidated Pension Plan Master Trust.
For HP, there are no pension-fund holders at Berkshire. Other reasons for suspecting the HP holding was Buffett’s was its large initial size, which was more than 10% of the total money run by Combs and Weschler.?
For other Berkshire equity investments, there are other clues as to who is managing them. DaVita, for instance, likely is a Weschler holding because he has long been invested in the kidney-dialysis company and personally owns a sizable stake. Buffett once said in an interview that Kroger was bought by one of his lieutenants. Other Berkshire holdings believed to be held by Combs and Weschler include Amazon.com (AMZN), General Motors (GM), and Snowflake (SNOW).
For Berkshire watchers, it pays to check the fine print of the company’s equity filings for clues as to whether an investment is overseen by Buffett.
Write to Andrew Bary at [email protected]