Warren Buffett isn’t close to beating the market this year, and a giant pension fund has cut its investment in Berkshire Hathaway , the investment juggernaut that Buffett helms.
Class B shares of Berkshire Hathaway stock (ticker: BRKb ) have only managed a 0.9% gain so far in 2019 through Friday’s close, in sharp contrast to the S&P 500’s 18.7% rise.
We’ve noted that Buffett suffered “a reputational and financial black eye” earlier this year as Berkshire took a $1 billion paper loss when Kraft Heinz stock (KHZ)—one of its larger investments—tumbled. Years ago, Buffett backed the combination of H.J. Heinz and Kraft Foods Group that created the company.
Oregon’s Public Employees’ Retirement Fund slashed two-fifths of its Berkshire stock investment by selling 141,822 Class B shares in the second quarter. OPERF, as the pension is known, made the disclosure in a form it filed this week with the Securities and Exchange Commission. OPERF, which recently was counted as the 42nd largest public pension in the world by assets, now owns 222,763 Class B Berkshire shares.
Selling Berkshire stock in the second quarter seems to have been an astute move as the shares have slipped 3.3% so far in the third quarter. We’ve noted that Buffett himself has been trimming his position in Berkshire through his gifting of stock.
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The pension also disclosed other big changes in some of its largest stock investments. OPERF slashed positions in General Electric (GE) and Verizon Communications stock (VZ), and more than doubled investments in Broadcom (AVGO) and Oracle (ORCL). OPERF declined to comment on its second-quarter stock trades.
The pension noted in a recent newsletter that it outperformed most peers in 2018, ending the calendar year with a gain of a half a percentage point while others reported losses. But every rose has its thorn, it is said. At the end of calendar 2017, the latest actuarial valuation date, Oregon’s pension system was only 73% funded against liabilities, but at least that was up from 69% at the end of 2016.
At June 30, OPERF owned $7.4 billion in U.S.-traded securities, about 10% of the total assets of $74.6 billion under management at the end of May, the latest monthly allocation data available.
OPERF cut nearly two thirds of its GE stock investment by selling 1.4 million shares in the second quarter, ending June with 924,965 shares. GE stock has had a surprisingly strong 2019, rising 38.0% year to date. Since the end of the second quarter, however, the shares have slipped about 4.4%. Nonetheless, we noted that at least one analyst expects the conglomerate’s shares to continue to climb to $16 or more in the next year. GE stock closed at $10.04 on Friday.
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Verizon stock has slipped 1.0% since the end of June and has managed a gain of only 0.7% for the year so far. OPERF chopped its investment in the telecom giant in half to 439,398 Verizon shares. Earlier this month, we noted that an analyst downgraded Verizon to Neutral from Buy. Citigroup’s Michael Rollins noted that “opportunities for further multiple expansion have narrowed.”
OPERF more than doubled its investment in chip giant Broadcom to 103,325 shares by buying 61,511 additional shares in the second quarter. Broadcom stock sports a 14.0% year-to-date gain, but it has edged up 0.7% since the end of the second quarter. We had suggested a Broadcom stock-options strategy earlier this month that could pay off if the U.S. and China can reach a trade pact.
Strong earnings have lifted Oracle stock this year. The software firm’s stock is up 27.4% so far in 2019, including a 1.0% gain since the end of June. OPERF doubled its investment in Oracle stock in the second quarter, ending June with 544,253 shares.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
https://www.barrons.com/articles/berkshire-hathaway-stock-is-lagging-and-a-giant-pension-just-slashed-its-stake-51563707754
2019-07-21 11:15:00Z
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