Warren Buffett Cuts Apple, Invests in Traditional Businesses

Berkshire Hathaway billionaire Warren Buffett bought over five million shares of the Unitedhealth Group for approximately $ 1.6 billion in the second quarter of this year. It was the biggest new Buffett bet for the last quarter.

At the same time, the company revealed previously secret positions from the first quarter – investment in construction companies DR Horton and Lennar and Nucor in the total value of about $ 1.11 billion. These purchases consisted of the so -called “secret position”, which Berkshire could not publish for several months thanks to the exception from the US Securities Commission (SEC) so that it can build shares gradually and do not drive the stock price.

Shares of Unitedhealth responded to the report in Thursday’s post -trade phase by more than 13 percent. According to Morningstar analyst Julie Utterback, the title is attractive. “We believe that Unitedhealth shares are undervalued despite growth after the Berkshire report,” she said, referring to the long -term growth potential and a strong position of the company on the health insurance market.

For Buffett, who will celebrate his 95th birthday at the end of August, this is not the very first experience with this title – between 2006 and 2009, Berkshire owned about 1.18 million UnitedHealth shares, but in 2010 she sold the entire share in a wider retreat from health insurance companies.

The return comes when the company is struggling with rising health care costs, federal investigations, reverberations of last year’s cyber attack and shock from the murder of one of the top managers. In addition, Unitedhealth recently has recently decreased its outlook and warned of additional billions of costs in the next quarters.

Berkshire’s stocks lost about 46 percent to the price of $ 271 from the beginning of the year.

On the other hand, Apple dominated on the side side, from which Berkshire sold about 20 million shares. Despite other sale, Apple remains the largest bet of Buffett’s team with the Berkshire portfolio. In addition, Berkshire completely appeared from T-Mobile US and reduced the share in Bank of America.

“Overall, it is a move from expensive technology giants towards more cyclic sectors linked to American housing, production and healthcare. The publication of these moves immediately moved the prices of the shares concerned,” he explains to Szdznys Analyst Timur Barotov from BH Securities.

Berkshire quarterly report is one of the most anticipated events on Wall Street. Investors study it to the last letter – Buffett’s company manages a portfolio worth hundreds of billions of dollars and its transfer of capital often sets the tone to the whole market. Every new position or sale is perceived as a signal in which direction the mood of investors can go.

At the end of the second quarter, the holding held funds and cash equivalents worth $ 344 billion. Berkshire was a net seller of shares between April and June – sold for about $ 6.9 billion and bought for $ 3.9 billion.

Berkshire Hathaway’s shares themselves have been going through one of the weakest periods of recent years. From May 2, when Warren Buffett announced that for almost six decades at the head of the company he would gradually hand over the management of manager Greg Abel, lost class shares and approximately 14 percent.

At the same time, the S&P 500 has increased by about 11 percent in the same period – the difference in 25 percentage points is one of the largest three -month drops of Berkshire to the market since 1990.

Analyst Tomáš Vranka of the Brocke company XTB recalls that a similar situation occurred last at a Covidal sale of shares, during the financial crisis and the rupture of the Internet bubble.

Although Buffett has changed the originally declining textile into an investment empire during his career, which has been defeating the market for tens of thousands of percent in the long term, some of the investors today wonder if its successor can maintain the same confidence and reputation.