Warren Buffett's Berkshire Hathaway makes big bets on drug stocks

Posted November 16, 2020 5:28 p.m. EST

— Warren Buffett's Berkshire Hathaway is making a big bet on the health care sector at a time when the Covid-19 pandemic continues to be a major crisis in the United States.

Berkshire Hathaway bought new shares in pharmaceutical companies AbbVie, Bristol-Myers Squibb, Merck and Pfizer during the third quarter.

The company disclosed its latest holdings in a filing with the Securities and Exchange Commission after the closing bell Monday.

The investments in the big drug stocks are also noteworthy considering that Bufett and Berkshire, along with Amazon and banking giant JPMorgan Chase, are partners in a health care effort known as Haven.

Berkshire Hathaway also acquired a new stake in wireless telecom leader T-Mobil and sold off its position in retail giant Costco.

It's been an interesting (and busy) couple of months for the Oracle of Omaha and Berkshire, marked by several uncharacteristic moves for the long-time value investor.

In August, Berkshire Hatahaway disclosed that it had bought a stake in mining company Barrick Gold. Buffett has in the past bashed the yellow metal as an investment.

He once wrote in one of his annual shareholder letters that owning gold was like having a giant cube that sat there and never produced anything because the commodity doesn't generate profits or pay dividends.

Berkshire also recently shocked Wall Street by investing in buzzy cloud software firm Snowflake ahead of its initial public offering.

Apple is currently Berkshire's largest holding, although the investment firm trimmed its stake in the stock by a small margin in the third quarter. But Buffett historically has been slow to embrace tech stocks — and when he does, they tend to be more mature companies such as Apple — not recent IPOs.

After all, Berkshire didn't invest in Amazon until the first quarter of 2019 — 22 years after the e-tailer's Wall Street debut.

The company has also increased its investments in retail and health care lately. Within the past year, Berkshire has invested in grocery king Kroger, high-end furnishings chain RH and drug company Biogen.

Berkshire announced in August that it had taken big stakes in several Japanese trading conglomerates. Earlier this summer, Berkshire also acquired natural gas assets from Dominion Energy for nearly $10 billion.

But Buffett has also been quick to unload stocks that haven't done so well recently. Berkshire Hathaway has slashed its position in Goldman Sachs, which it had bought a big stake in during the middle of the Great Recession.

Berkshire has also been selling shares of Wells Fargo, the scandal-ridden bank that continues to struggle, and sold more of its holdings in the third quarter.

And Berkshire liquidated its entire stake in four major airlines — American, Delta, Southwest and United — earlier this year as they have been hit hard by the Covid-19 pandemic.

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