How To Work With The Best

Imagine that you wanted to become the world’s best basketball player and you could occasionally get input from Michael Jordan or Lebron James to give you some guidance. Imagine that you want to become the world’s best football player and you could turn to Doug Pederson for some tips every couple months. Imagine you wanted to become the world’s greatest fashionista and you could get a little help from Tom Ford.

Those specific people may be out of reach for the average person, but it’s not out of reach for the financial investor. Therefore, I would like to introduce you to the United State’s Securities and Exchange Commission’s form 13F. Any institutional investors operating in the U.S. have to file this form that represents their holdings for the quarter. In other words; the world’s greatest investors are publicly disclosing on government mandated forms what they are doing; similar to the guidance I mentioned above.

I am bringing this to light because I just read over the 13F for Berkshire Hathaway (NYSE:BRK.A). Their 13F form was filed on February 14 for the previous quarter. What I found most interesting about this date is it covered the period where the stock market saw some significant drops and made buying opportunities available. As such; I was curious to see where the Oracle of Omaha parked his cash on the large dip.

The simple answer appears to be that he bought up banks; most notably PNC and US Bank. This is most likely due to the fact that banks have been fairly undervalued as of late; probably because of the memories of 2009, but according to the 13F; Berkshire sees a long term potential in the banking business over the next several years. In case you did not know; BRK.A’s CEO Warren Buffet is a long term investor; which is why his 13F is so useful.

Now for the other item of note; new cash was not added to fund the bank purchases; it appears like the bank purchases were funded by selling some tech companies, most notably, Oracle. This is information is very telling in that Berkshire believes the market is still overvalued, even with the dip so they did not add capital. More to follow on this, but I believe this may mean that 2019 will be a bumpy road for the markets.

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