Berkshire Hathaway, the holding company of billionaire investing legend Warren Buffett, owns a very small selection of very large positions. Berkshire's $221 billion 13F portfolio contained just 46 positions on September 30, many of which the company has owned for years or even decades. Having the world's 3rd-richest person as a shareholder is a badge of honor only a select group of companies can lay claim to.
Berkshire Hathaway had its usual low turnover rate in Q3 according to the company's latest 13F filing, adding just four new positions to its portfolio and selling off two old ones. Nearly 70% of Berkshire's 13F portfolio was invested in finance and tech stocks, while consumer staples stocks, which have accounted for over 40% of Berkshire's portfolio in the past, fell further out of favor during the quarter, sliding to less than 17% weighting. Because of the size of Berkshire's holdings, it can shake the market when it buys and sells its positions, depending on the size of the company and its average trading volume. That phenomenon applies even more so to the hedge fund industry as a whole, which manages over $3 trillion in assets. Hedge funds drastically lowering their exposure to the S&P 500 over the past two months (by nearly 70% to just 40%) has only exacerbated the Q4 selloff, which has affected most of the 30 Most Popular Stocks Among Hedge Funds in Q3.
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It's also important to monitor insider buying activity, which can provide valuable signals about which stocks may be undervalued and which leadership teams are the most confident in their future prospects, so much so that they're betting their own money on the company's success. Past studies have shown that stocks with spontaneous insider buying activity tend to outperform the market over the following year.
Below we've gathered 4 stocks that Warren Buffett and insiders love, and 1 stock they don't really care for.
4 Stocks Warren Buffett and Insiders Are Bullish On
Restaurant Brands International Inc (NYSE:QSR) Restaurant Brands International Inc (NYSE:QSR) has been losing hedge fund support for several quarters in a row, but it hasn't lost Buffett's yet. The Oracle of Omaha still maintains the same position of 8.44 million shares that he first bought in the final quarter of 2014. Fellow billionaire Bill Ackman also remains as bullish as ever, with QSR ranking as his top stock pick.
Ackman praised the company's performance in Pershing Square’s Q3 investor letter, writing: “Despite the stock’s performance, overall results remain strong, as free cash flow per share growth has increased more than 30% this year due to a combination of positive same-store stores growth, strong net unit growth and a substantial benefit from last year’s refinancing of high-cost preferred stock."
QSR director Golnar Khosrowshahi purchased 5,670 shares on June 18, while numerous other insiders made purchases during the prior few months.
The PNC Financial Services Group, Inc. (NYSE:PNC)
The PNC Financial Services Group, Inc. (NYSE:PNC) is one of 20 Dividend Stocks That Billionaires Are Piling On, which includes the greatest hedge fund billionaire of them all. Buffett's Berkshire bought 6.09 million PNC shares during Q3, taking an $829 million position in the stock. Buffett also added JPMorgan Chase & Co. (NYSE:JPM) to Berkshire's 13F portfolio during the quarter, which already contained several multibillion-dollar positions in other banking giants. The PNC Financial Services Group, Inc. (NYSE:PNC) insider Martin Pfinsgraff bought 700 shares at $142.15 per share on July 18.
Mastercard Incorporated (NYSE:MA) Mastercard Incorporated (NYSE:MA) ranks as one of the 30 Stocks Billionaires Are Crazy About and Warren Buffett is guilty as charged. Berkshire Hathaway owns 4.93 million shares of the stock, a collection worth $1.10 billion on September 30. It's not just Mastercard but the entire payment processor space that Buffett is extremely bullish on, owning large positions in American Express Company (NYSE:AXP) and Visa Inc (NYSE:V) as well. Mastercard director Richard K. Davis bought 2,475 shares at $196.37 each on November 2. Phillips 66 (NYSE:PSX) Phillips 66 (NYSE:PSX) is a stock that tends to be more popular among billionaires like Buffett than it is among other hedge funds. It also ranked among the 20 Dividend Stocks That Billionaires Are Piling On, even though just 43 hedge funds tracked by Insider Monkey's database owned it. Hedge funds did grow much more bullish on PSX during the middle six months of this year, as there was a 43% jump in the number of funds owning the stock. Phillips 66 director Brian J. Ferguson gained indirect ownership of 21,500 PSX shares on November 20 at an average price of $92.31, which were bought by an entity which Mr. Ferguson and his spouse control.
1 Stock Buffett and Insiders Don't Really Care For
Walmart Inc. (NYSE:WMT)
Buffett's Berkshire sold off its 1.39 million Walmart Inc. (NYSE:WMT) shares in Q3, a stake worth $119 million in the middle of 2018. That severed Buffett's status as a Walmart shareholder for the first time in over a decade, as Berkshire had held the stock since mid-2005. Insiders meanwhile haven't considered the mega-retailer's shares worth purchasing since 2015, when Walmart director Timothy P. Flynn, who's been a member of the company's board since 2012, purchased 10,000 shares at just $58.46 per share. That lone purchase is the only one by a Walmart insider since 2010.