Last quarter, Warren Buffett’s business reduced its stake in Apple by half, stepped out of Snowflake and Paramount Global, and made fresh stakes on Ulta Beauty and Heico. In a regulatory filing on Wednesday, the renowned investor’s Berkshire Hathaway described the dramatic adjustments to its stock portfolio.
The conglomerate invested $266 million at the end of June in Ulta, acquiring roughly 690,000 shares of the cosmetics retailer. Additionally, it acquired roughly a million Heico shares, which, at the end of the quarter, represented a $185 million stake in the manufacturer of electrical equipment.
Buffet Effect
Due to additional investment following Berkshire’s vote of confidence, Ulta and Heico shares saw increases of up to 16% and 4%, respectively, in premarket trading on Thursday – a manifestation of the “Buffett effect.”
At Wednesday’s end, Heico and Ulta had both dropped by roughly a third so far this year; the retailer is now worth somewhat less than $16 billion. Ulta offers fragrances, skin care, hair care, and mass market and luxury cosmetics, including Rihanna’s Fenty Beauty, through roughly 1,400 physical locations and online.
Additionally, Buffett and his investment managers, Ted Weschler and Todd Combs, concluded their bets on Paramount and Snowflake, a leader in cloud computing. At the end of March, their stakes were estimated to be worth $89 million and $1 billion, respectively.
Largest Portfolio Holding Dropped
At the end of June, Berkshire owned 400 million Apple shares, matching its holding in Coca-Cola. The company’s recent second-quarter earnings, which showed that the value of its largest portfolio holding dropped from $135 billion to $84 billion last quarter, provided a hint as to what their Apple sales would be like. In the first quarter, it had already reduced the stake by 13%.
Given that Buffett frequently places bets worth billions of dollars, Combs and Weschler most likely selected Ulta and Heico as stocks. Given that Berkshire wholly owns shops such as Fruit of the Loom and Helzberg Diamonds, in addition to aerospace supplier Precision Castparts, both businesses appear to be within its comfort zone.
The majority of Berkshire’s $97 billion in stock sales during the first half came from Apple disposals; the company only bought $4.3 billion worth of stock during that time.
At the end of June, Buffett’s company had an extraordinary cash pile of $277 billion, which included $235 billion in short-term Treasurys, which is more than the Federal Reserve’s holdings of T-bills.
