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Is Warren Buffett Losing His Influence over Equity Markets?

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Warren Buffett

Last week, Berkshire Hathaway (BRK-B) released its much-anticipated 13F for the fourth quarter. Berkshire added more shares of US Bancorp, JPMorgan Chase, Bank of America, Bank of New York Mellon, PNC Financial Company (PNC), and Travelers Company. It also added Red Hat (RHT) (IBM) and Suncor (SU) to its portfolio.

The company trimmed stakes in Southwest Airlines (LUV), United Continental (UAL), Phillips 66 (PSX), and Charter Communications (CHTR). The most notable sells were Apple (AAPL) and Oracle (ORCL). Notably, Berkshire exited Oracle within a quarter, something chair Warren Buffett doesn’t do often.

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Market reaction

The market’s reaction to Berkshire’s 13F was cold at best. Suncor did rise 4.1% on Friday as investors saw Berkshire’s investment in the company as a bullish sign. However, the price movements of other stocks that Berkshire added or sold were largely in line with their peers.

Apple (AAPL) did close marginally lower on Friday despite the NASDAQ (QQQ) closing in the green. However, the other FAANG (Facebook, Amazon, Apple, Google, and Netflix) stocks saw negative price action on that day. Apple actually fell the least among the FAANG stocks. Interestingly, Oracle (ORCL) closed with gains on Friday despite a downvote from Berkshire Hathaway. Wells Fargo (WFC) also closed with gains despite Berkshire trimming its stake. However, we should remember that Berkshire has been gradually selling Wells Fargo stock to get its holding below 10%.

To be sure, Berkshire’s outperformance versus the S&P 500 (SPY) has narrowed sharply this century. Read Analyzing Warren Buffett’s Investments in the 21st Century to learn more.

In the next article, we’ll discuss Berkshire’s Oracle exit.

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