Berkshire Hathaway Inc. (NYSE: BRK.A) filed a report on Nov. 16 listing the Warren Buffett stocks the billionaire bought and sold during Q3 2015.
The focus of the Warren Buffett stock moves were his decreased positions in Goldman Sachs Group Inc. (NYSE: GS) and Wal-Mart Stores Inc. (NYSE: WMT). In Q3, Buffett sold 13% of his 12.6 million shares in GS and 7% of his 60.4 million shares in WMT, according to ABC News.
In an interview with CNBC, Buffett said he sold GS stock and WMT stock to raise cash for his planned $32 billion acquisition of industrial goods company Precision Castparts Corp. (NYSE: PCP). Buffett plans to use $22 billion in cash from Berkshire and borrow $10 billion to complete the deal.
But some investors are skeptical of Buffett's reasoning...
Berkshire Hathaway reported $56.2 billion in cash and equivalents at the end of Q3. So analysts believe Buffett could complete the Precision acquisition without the sale of Wal-Mart and Goldman Sachs stock.
Investors are also skeptical because WMT stock and GS stock have been extremely volatile in 2015. In the last year, WMT stock is down more than 29%. While GS stock has returned a gain of just 0.3% in the last year, it has a 52-week range of $167.49 to $218.77.
Despite selling his stakes, Buffett stated that he still likes WMT stock and GS stock.
Even if Buffett's true intentions aren't clear, investors follow Warren Buffett stocks because many want to directly invest like Warren Buffet. At the very least, many want to know his position on specific companies.
After all, the 85-year-old investing legend has a net worth of $63.2 billion, according to Forbes.
Here's what investors need to know about WMT, GS, and the other Warren Buffett stocks sold in Q3 2015...
Warren Buffett Dumping WMT and GS Stock Signals Sell
If you want to invest like Warren Buffett, you first need a deep understanding of a company's long-term strategies and its fundamentals.
And right now, Wal-Mart's long-term revenue growth isn't promising...
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Money Morning Chief Investment Strategist Keith Fitz-Gerald warned readers on Oct. 19 about the trouble Wal-Mart will face. The company has already lowered expectations all the way through 2017.
"The fact that Wal-Mart is talking about 2017 implies another four to six quarters of negative growth," Fitz-Gerald stated. "Only two quarters are required for a recession."
And according to Fitz-Gerald, WMT stock has much further to fall from here. The fact that Warren Buffett is selling a major position in the company is just another bearish sign.
When it comes to Goldman Sachs, retail investors simply could not have profited the same way Warren Buffett has over the years...
Buffett is well-known for his love of dividend-paying stocks. When Berkshire Hathaway purchased $5 billion in preferred stock of Goldman Sachs in 2008, Warren Buffett received a 10% annual dividend. With $500 million in annual dividends, you could see why Buffett wouldn't mind forking over a few billion. GS stock would eventually pay for itself.
His dividend payments were cancelled through restructured terms, but Buffett ended up with $2 billion in GS common stock in 2010, which only cost Berkshire $750 million, according to The Motley Fool.
If you understand Goldman's fundamentals and like the business' model, it's an appropriate investment. Just don't expect to have the same type of deals as Warren Buffett.
These were the two main Warren Buffett stocks sold in Q3 2015. Here's the rest of Warren Buffett's sold stocks...
Warren Buffett Stocks Sold in Q3 2015
Aside from selling off large stakes in WMT and GS, Buffett also sold all of his 5.6 million shares of Viacom Inc. (Nasdaq: VIAB). With high debt-management risk and mixed quarterly earnings results throughout the year, Buffett is not betting on a comeback story. VIAB shares are down 30.68% over the last 12 months.
Buffett also decreased his holdings in Deere & Co. (NYSE: DE) from 17.3 million to 17.1 million and cut his shares in Chicago Bridge & Iron Co. (NYSE: CBI) down to under 2 million shares from his 9.3 million at the end of June. DE fell 14.22% and CBI fell 23.27% in the last year.
Here are three more Warren Buffett stocks that Berkshire Hathaway reduced its position in:
- Bank of New York Mellon Corp. (NYSE: BK) - reduced shares from 20.7 million to 20.1 million. Shares are up 7.40% in the last year.
- Media General Inc. (NYSE: MEG) - reduced shares from 4.6 million in Q2 to 3.5 million in Q3. Shares are up 5.23% in the last 12 months.
- Wabco Holdings Inc. (NYSE: WBC) - reduced holdings in Q1, Q2, and Q3, and now has 3.6 million shares. WBC shares are up 1.25% on the year.
Warren Buffett Stocks Bought in Q3 2015
One of the bigger surprises in Buffett's stock purchases was an increase in International Business Machines Corp. (NYSE: IBM) shares. Buffett increased his total position to 81 million, up 2% from Q2. Although IBM has reported 14 straight quarters of declined revenue, Buffett obviously still sees value in this aging tech giant. IBM shares are down 16.5% in the last 12 months.
Buffett is a value investor, and he's going to view dips in stock price as a buying opportunity. That is presumably what he did with IBM stock.
Buffett also nearly doubled his shares in Liberty Media Corp. (Nasdaq: LMCA) to 23.2 million from his previous 12 million shares in June, and he increased his shares in Phillips 66 (NYSE: PSX) to 61.5 million from 29.7 million. LMCA shares are up 13.05% and PSX shares are up 16.99% in the last 12 months.
While it may seem that Buffett added a major position in AT&T Inc. (NYSE: T) and Kraft Heniz Co. (Nasdaq: KHC), his shares came to be through mergers. Buffett retained 325 million shares in the Kraft/Heinz merger and received 59 million shares after the AT&T and DirectTV merger.
Here are five more notable Warren Buffett stock purchases from Q3:
- Charter Communications Inc. (Nasdaq: CHTR) - increased shares from 5.98 million to 8.51 million. CHTR is up 14.48% in the last 12 months.
- Axalta Coating Systems Ltd. (NYSE: AXTA) - increased shares by 21%. AXTA is up 22.04% in the last 12 months.
- Twenty First Century Fox Inc. (Nasdaq: FOX) - increased shares from 6.2 million to 9 million. FOX shares are down 9.62% on the year.
- General Motors Co. (NYSE: GM) - purchased 9 million shares. GM shares are up 10.91% in the last 12 months.
It's nice to know what Warren Buffett stocks are doing, but the average investor shouldn't copy his every move. His strategy just doesn't always apply to retail investors, because he's working with billions of dollars in capital.
If there is one investing trait to take away from Buffett, it's that you should always understand the fundamentals of any company you invest in.
Jack Delaney is an Associate Editor for Money Morning. You can follow him on Twitter and follow Money Morning on Facebook.