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Warren Buffett's Berkshire Sells Oracle, Trims Apple and Buys 3 in 4th Quarter

- By James Li

Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio) disclosed this week his conglomerate axed its stake in Oracle Corp. (ORCL), trimmed its holding in Apple Inc. (AAPL), and established three new positions during fourth-quarter 2018: Red Hat Inc. (RHT), Suncor Energy Inc. (SU) and StoneCo Ltd. (STNE).


Known as the "Oracle of Omaha," Buffett follows a value-investing strategy based on his mentor Ben Graham's approach. He lists four key investing criteria: understandable business, favorable long-term prospects, honest and competent management, and attractive prices. GuruFocus offers a value screener directly based on Buffett's strategy: the Buffett-Munger Screener. Table 1 lists the number of Buffett-Munger stocks for each region as of Friday.

GuruFocus Region

Number of Buffett-Munger Stocks as of Feb. 5

USA

34

Canada

5

U.K. / Ireland

18

Europe

68

Asia

79

Oceania

0

Latin America

27

Africa

4

India

49



Table 1

Sold out: Oracle

Having established a 41,404,791-share stake in Oracle during third-quarter 2018, Berkshire sold all shares during fourth-quarter 2018. Shares averaged $48.57 during the quarter ending September 2018 and $47.81 during the quarter ending December 2018.

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Redwood Shores, California-based Oracle offers software licenses, support, and maintenance services worldwide. GuruFocus ranks the company's profitability 7 out of 10: even though the company's operating margin has declined over the past five years, Oracle's profit margins are still outperforming over 72% of global competitors.

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Berkshire makes "unrelated" transaction in Apple

Berkshire sold 2,889,450 shares of the Cupertino, California-based company for an average price of $192.15.

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CNBC columnist Yun Li said on Friday that Buffett's assistant Debbie Bosanek reported to Reuters that one of Berkshire's managers other than Buffett "had a position in Apple and sold part of it to make an unrelated purchase." Li then reiterated Buffett's comments from May 2018: Buffett told CNBC that Berkshire "buys [Apple's shares] to hold" and that Buffett still champions the company's activities and the way management thinks.

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GuruFocus ranks the company's profitability 8 out of 10 on several positive signs, which include operating margins outperforming 97% of global competitors despite contracting approximately 1.9% per year over the past five years. Apple's business predictability ranks 2.5 stars out of five on moderately consistent revenue growth over the past 10 years.

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Other gurus with large holdings in Apple include Ken Fisher (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

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Red Hat

Berkshire invested in 4,175,792 shares of Red Hat, a company tied to a planned merger with International Business Machines Corp. (IBM). Shares of the open-source solutions provider averaged $159.61 during the quarter.

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Raleigh, North Carolina-based Red Hat provides services for its version of Linux and other related middleware, storage, virtualization and management tools. GuruFocus ranks the company's profitability 9 out of 10 on several positive indicators, which include expanding profit margins and a strong Piotroski F-score of 7. Additionally, Red Hat's business predictability ranks 4.5 stars out of five on strong and consistent revenue growth over the past 10 years.

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Other gurus riding Red Hat's strong growth potential include Mario Gabelli (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).

Suncor Energy

Berkshire invested in 10.758 million shares of Suncor Energy for an average price of $33.01.

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Calgary, Canada-based Suncor Energy engages in various energy operations, which include oil sands development and upgrading, offshore oil and gas production, and petroleum refining. GuruFocus ranks the company's profitability 5 out of 10: Although the company's operating margin outperforms 74% of global competitors, Suncor's three-year revenue growth rate of 5.40% underperforms 54% of global integrated energy companies.

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StoneCo

Berkshire invested in 14,166,748 shares of StoneCo, a Brazilian provider of financial technology solutions that facilitate the conduction of electronic commerce for merchants and integrated partners. Although shares averaged $22.95 during the quarter, Berkshire purchased the shares at the IPO price of $24 according to filings with the U.S. Securities and Exchange Commission.

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Disclosure: No positions.

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This article first appeared on GuruFocus.