Warren Buffett buying chip stocks is a classic example of why you want to “get greedy only when others are afraid.”


It’s been quite a year for Berkshire Hathaway and CEO Warren Buffett. The conglomerate announced its investments in other companies at the end of the third quarter, and one name — and one industry — stands out.

In a Nov. 14 filing with the Securities and Exchange Commission, Berkshire disclosed investments in 50 stocks with a total market value of $296.1 billion as of Sept. 30.

Berkshire opened three new stock positions in the third quarter:

Company

Ticker

Value of Berkshire’s holdings – September 30 (million dollars)

Berkshire’s ownership stake

Total revenue – until November 15, 2022

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

TSM

4118 dollars

1.16%

-39%

Louisiana-Pacific Corp.

LPX

297 dollars

7.85%

-24%

Jefferies Financial Group Inc.

JEF

13 dollars

0.19%

-2%

Sources: Berkshire Hathaway 13F filings, FactSet

Click on the icons for more information about each company. Read Tommy Kilgore’s in-depth guide to information wealth for free on the MarketWatch quote page.

The 13F filing doesn’t say exactly when the shares were bought, but Berkshire strengthened its $4.1 billion position in Taiwan Semiconductor TSM.
after the semiconductor industry fell hard. Semiconductor manufacturing has traditionally been a cyclical business, and TSM is the world’s largest volume producer of computer chips.

“Our purpose is more modest: we seek to be fearful when others are greedy, and to be greedy only when others are fearful.”


— Berkshire Hathaway CEO Warren Buffett in his 1986 annual letter to shareholders.

Semiconductor stocks fell after investors recognized the group was entering a down cycle. The iShares Semiconductor ETF hit a 2022 low on Oct. 14, when it fell 44% for the year before rallying 25% through Nov. 14.

As SOXX bottomed out, Taiwan Semiconductor was hit even harder with a 46% decline, which may reflect tensions between China and the US over China’s claim to Taiwan. (All returns in this article include reinvested dividends.)

On Nov. 3, Taiwan Semiconductor hit a 2022 low and is down 49% for the year. Berkshire built its position in TSM between June 30, when the stock fell 35% for 2022, and September 30, when it fell 41% for the year.

Buffett’s timing appears to have been excellent, as part of Berkshire’s long-term strategy discussed in its annual letter to shareholders included in its 1986 report. Buffett explained that the market disruption was unexpected.

“Our goal is more modest: to be fearful when others are greedy, and to be greedy only when others are fearful,” he said.

A complete list of Buffett’s letters to shareholders can be found here.

And now that President Biden said after his meeting with Chinese President Xi Jinping that he doesn’t expect China to try to invade Taiwan soon, followed by Berkshire’s announcement (both on November 14), TSM shares rose on November 15. .

Read: Quality and high dividends set these five semiconductor stocks apart from underperforming peers

Other stocks Berkshire added, sold or cut

During the third quarter, Berkshire added to its holdings of the following stocks. They are ranked according to the market value of holdings as of September 30:

Company

Ticker

Value of Berkshire’s shares – September 30 ($ million)

Value of Berkshire’s shares – June 30 ($ million)

Ownership share – September 30

Total revenue – until November 15, 2022

Chevron Corp.

CVX

$23,757

$23,373

8.55%

63%

Occidental Petroleum Corp.

OXY

$11,943

9,335 dollars

21.38%

154%

Paramount Global Class B

MONEY

1737 dollars

1935 dollars

14.99%

-37%

Celanese Corp.

CE

877 dollars

1077 dollars

8.96%

-36%

RH

RH

581 dollars

461 dollars

9.95%

-47%

Sources: Berkshire Hathaway 13F filings, FactSet

And Berkshire was added to the Paramount Global PARA holding
and Celanese Corp. CE
during the third quarter, September 30 position values ​​were lower than June 30, as shares declined 22% and 23%, respectively.

Berkshire sold all of its shares of Store Capital Corp during the third quarter. This position was valued at $385 million as of June 30.

Other Berkshire stock positions that were partially sold during the third quarter included:

Company

Ticker

Value of Berkshire’s shares – September 30 ($ million)

Value of Berkshire’s shares – June 30 ($ million)

Ownership share – September 30

Total revenue – until November 15, 2022

General Motors Co.

GM

1605 dollars

1971 dollars

3.43%

-32%

Kroger Co.

KR

2199 dollars

2744 dollars

7.02%

5%

Bank of New York Mellon Corp.

BK

2396 dollars

3018 dollars

7.70%

-23%

US Bancorp

USB

3136 dollars

5818 dollars

5.24%

-20%

Activision Blizzard Inc.

ATVI

$4,471

5326 dollars

7.69%

12%

Sources: Berkshire Hathaway 13F filings, FactSet

Berkshire’s performance: How to rest easier

Here’s a five-year chart showing Berkshire’s B Class BRK returns
Stocks versus the benchmark S&P 500 SPX
Until November 14:

A collection of facts

Berkshire’s five-year total return was slightly higher than the S&P 500. Perhaps your first reaction is that this performance is nothing to get excited about.

If you had looked at Berkshire’s same five-year performance against the index a year ago, you would have seen Berkshire’s 81% return trailing the S&P 500’s 136% return, and you would have bought into Buffett’s value investing philosophy. it was worn out.

But over the past year, the S&P 500 is down 14%, and Berkshire’s Class B shares are down 8.5%.

For many investors, the ability to sleep better at night may make Buffett’s value approach more worthwhile.

Don’t miss: How these 22 tech stocks stand out this earnings season



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