The 4 Best Stocks Warren Buffett Has Bought and Sold

The Oracle of Omaha, Warren Buffett, wrote in 2016, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do."

2022 has undoubtedly been one of those years in which the legendary investor and the Chairman and CEO of the multinational holding company Berkshire Hathaway Inc. (BRK.A) (BRK.B) walked his talk.

While geopolitical turbulence, decades-high inflation, and hawkish central banks kept speculators and market timers fearful of an imminent economic downturn, Warren Buffet let his greed run wild by going on a shopping spree with the mountain of cash he had been accumulating over the past year.

Implementing Buffett’s time-tested investment strategy of buying parts or the entirety of growing businesses with exceptional management and enduring competitive advantages at reasonable prices, Berkshire Hathaway loaded up on Taiwan Semiconductor Manufacturing Company Limited (TSM) and Activision Blizzard, Inc. (ATVI) while trimming its holdings in General Motors Company (GM) and The Kroger Co. (KR).

Stocks Buffett Bought:

Taiwan Semiconductor Manufacturing Company Limited (TSM)

Headquartered in Hsinchu City, Taiwan, TSM provides integrated circuit manufacturing services internationally. This involves manufacturing, packaging, testing, and selling integrated circuits and other semiconductor devices.

On December 6, TSM updated that in addition to its first fab in Arizona, which is scheduled to begin production in 2024, it has also started the construction of a second fab, scheduled to begin production in 2026.

The overall investment for these two fabs will be approximately US$40 billion. When complete, TSMC Arizona’s two fabs will manufacture over 600,000 wafers annually, with an estimated end-product value of more than US$40 billion.

On November 14, Berkshire Hathaway disclosed that it had bought more than $4.1 billion of TSM shares. As of September 30, the conglomerate headquartered in Omaha, Nebraska, owned 60.1 million ADRs of TSM. This significant investment underscores the company’s competitive advantage and long-term growth potential.

On October 27, TSM announced the Open Innovation Platform (OIP) 3DFabric Alliance at the 2022 Open Innovation Platform Ecosystem Forum. TSM’s first-of-its-kind alliance in the semiconductor industry will help customers achieve speedy silicon and system-level innovations and enable next-generation HPC and mobile applications using TSM’s 3DFabric technologies.

TSM’s revenue for November 2022 came in at NT$222.71 billion ($7.25 billion), registering an increase of 5.9% sequentially and 50.2% year-over-year. For the third quarter of fiscal 2022 ended September 30, TSM’s net sales increased 47.9% year-over-year to NT$613.14 billion ($19.95 billion), while its income from operations increased 81.5% year-over-year to NT$310.32 billion ($10.10 billion).

During the same period, TSM’s net income increased 79.7% to NT$280.87 billion ($9.14 billion) or NT$10.83 per share, up 79.8% year-over-year.

Analysts expect TSM’s revenue for the fiscal year 2022 to increase 28.6% year-over-year to $73.85 billion, while its EPS is expected to increase 56.8% year-over-year to $6.46. It has also impressed by surpassing the consensus EPS estimates in each of the trailing four quarters.

The stock has dipped 9.3% over the past month to close the last trading session at $74.89.

TSM has an overall rating of B, equating to a Buy in our proprietary rating system. It has an A grade for Sentiment and Quality. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TSM is ranked #9 of 93 stocks within the B-rated Semiconductor & Wireless Chip industry. 

Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Value for TSM.

Activision Blizzard, Inc. (ATVI)

ATVI develops, publishes, and distributes interactive entertainment content and services on video game consoles, personal computers, and mobile devices. The company operates through four segments: Activision Publishing, Inc. (Activision); Blizzard Entertainment, Inc. (Blizzard); King Digital Entertainment (King); and Other.

On December 8, ATVI CEO Bobby Kotick, in his letter to all employees, updated that, despite the U.S. Federal Trade Commission (FTC)’s decision to challenge the company’s pending merger with Microsoft Corporation (MSFT), he is confident of the closure of the deal. While stating that the allegation that this deal is anti-competitive doesn't align with the facts, he expressed his conviction that ATVI would win this challenge.

Berkshire Hathaway almost quadrupled its holdings in ATVI from 14.66 million shares in Q4 of 2021 to 60.14 million shares by the time the former filed its Q3 report. The conglomerate now owns 1.5% of ATVI’s combined holdings as part of its merger arbitrage bet.

ATVI’s total net revenues for its fiscal third quarter, ended September 30, 2022, came at $1.78 billion. During the same period, the company’s non-GAAP net income came in at $539 million, or $0.68 per share.

ATVI’s total assets stood at $25.62 billion as of September 30, 2022, compared to $25.06 billion as of December 31, 2021.

Analysts expect ATVI’s revenue and EPS for the fourth quarter of the fiscal year 2022 to increase 46.3% and 20.8% year-over-year to $3.16 billion and $1.51, respectively. Moreover, the company’s revenue and EPS for fiscal 2023 are expected to increase 18.2% and 28% year-over-year to $9.60 billion and $3.90, respectively.

ATVI’s stock has gained slightly over the past month and 12.7% year-to-date to close the last trading session at $75.95.

ATVI has a B grade for Sentiment and Quality. It is ranked #10 of 20 stocks in the Entertainment – Toys & Video Games industry.

In addition to the above, we have also rated ATVI for Growth, Value, Stability, and Momentum. Get all ATVI ratings here.

Stocks Buffett Sold:

General Motors Company (GM)

GM designs, builds, and sells trucks, crossovers, cars, automobile parts, and accessories and provides software-enabled services and subscriptions globally. The company operates through four segments: GM North America; GM International; Cruise; and GM Financial.

On December 7, GM officially launched its Dealer Community Charging Program by installing the first community charging stations in Wisconsin and Michigan. The program initially opened to Chevrolet dealers earlier this year and will expand to Buick, GMC, and Cadillac dealers in January 2023.

Through this program, the company and its dealers are working to improve charging access in underserved communities, thereby ensuring the EV market's expansion while increasing its EV portfolio's penetration.

On December 5, GM opened Canada’s first full-scale electric-vehicle manufacturing plant to build BrightDrop Zevo fully electric delivery vans. This plant is set to become the new global manufacturing home of BrightDrop’s fully electric delivery vans.

BrightDrop also announced the commencement of commercial operations in Canada, with DHL slated to be the company’s first Canadian customer.

On November 18, GM announced its plan to invest $45 million at its Bedford, Indiana, aluminum die-casting foundry, in addition to the $51 million investment in 2021. This investment will expand the facility’s production capacity of EV drive unit castings to support the anticipated strong demand for the Chevrolet Silverado EV and GMC Sierra EV full-size pickups.

On November 17, 2022, GM and Vale Canada Limited, a subsidiary of Vale S.A. (VALE), signed an agreement for the long-term supply of battery-grade nickel sulfate to enhance North American EV supply chains. This deal is expected to help GM reach its target of building 1 million EVs annually in North America in 2025.

Although Berkshire Hathaway had trimmed its stake in GM from 60 million shares at the end of 2021 to 50 million in the third quarter of 2022, the above developments are expected to add momentum to GM’s transition to e-mobility.

For the fiscal third quarter, ended September 30, 2022, GM’s total net sales and revenue increased 56.4% year-over-year to $41.89 billion. During the same period, the company’s adjusted net earnings increased 47.5% year-over-year to $3.28 billion, while its adjusted EPS increased 48% year-over-year to $2.25.

Also, its net income attributable to stockholders came in at $3.31 billion, a 36.6% increase from the prior year’s quarter, and its adjusted EPS stood at $2.25, up 48% year-over-year.

GM pays a $0.18 per share dividend annually, which translates to a 0.51% yield on the current price. Its four-year average dividend yield is 2.15%.

Analysts expect GM’s revenue and EPS for the current fiscal ending December 2022 to increase 21.4% and 1.1% year-over-year to $154.22 and $7.15, respectively. Moreover, the company has surpassed its consensus EPS estimates in three of the four trailing quarters.

The stock has gained 2.6% over the past six months to close the last trading session at $33.83.

GM has an overall rating of B, which equates to a Buy in our proprietary rating system. It has an A grade for Growth and a B for Value and Sentiment.

GM is ranked #18 of 62 stocks in the Auto & Vehicle Manufacturers industry.

Beyond what has been stated above, additional ratings for GM’s Stability, Momentum, and Quality are available here.

The Kroger Co. (KR)

KR operates primarily in the United States as a retailer through multi-department stores, price-impact warehouses, marketplace stores, and food/drug stores. It also manufactures and processes food products for sale online and in supermarkets.

Berkshire Hathaway’s stake in KR amounted to 50.27 million shares by the end of the third quarter of the current fiscal year, down from 61.41 million at the end of 2021.

On December 16, KR’s healthcare division, Kroger Health, and its Family of Pharmacies announced a direct agreement with Prime Therapeutics LLC (Prime) for the former to remain in-network effective January 1, 2023. This direct agreement demonstrates a continued commitment to providing millions of patients with quality, affordable healthcare services.

On December 12, KR announced the launch of floral and sushi delivery on the DoorDash marketplace from banner stores across the country. The new delivery option through DoorDash marks the latest expansion of the grocer's seamless experience, providing customers with even more opportunities to get fresh, affordable products.

On October 18, KR officially opened its newest Customer Fulfillment Center (CFC) in Romulus, Michigan. In partnership with the Ocado Group (OCDO), the CFC will leverage advanced robotics technology and creative solutions to redefine the customer experience in the greater Detroit area.

On October 14, KR and Albertsons Companies, Inc. (ACI) announced that they have entered into a definitive agreement under which the two complementary organizations with iconic brands and deep roots in their local communities will merge into a single entity.

Under the terms of the merger agreement, KR will acquire all of the outstanding shares of ACI common and preferred stock for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion, including the assumption of roughly $4.7 billion of ACI’s net debt.

This merger is expected to lead to greater synergy and significant inorganic growth in KR’s top line.

For the third quarter that ended November 5, 2022, KR’s sales came in at $34.20 billion, up 7.3% year-over-year. During the same period, net earnings attributable to KR came in at $398 million, while its adjusted EPS came in at $0.88, up 12.8% year-over-year. The company’s total assets came in at $49.99 billion as of November 5, 2022, compared to $49.83 billion as of November 6, 2021.

Analysts expect KR’s revenue for fiscal 2023 to increase 7.6% year-over-year to $148.33 billion. During the same period, its EPS is expected to increase 12.2% year-over-year to $4.13. Moreover, it has impressed by surpassing consensus EPS estimates in each of the four trailing quarters.

The stock has gained 1.6% year-to-date to close the last trading session at $46.47.

KR has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It has a B grade for Value and Quality.

KR is ranked #13 of 39 stocks in the A-rated Grocery/Big Box Retailers industry.

Click here for additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for KR.

TSM shares were trading at $74.33 per share on Tuesday afternoon, down $0.56 (-0.75%). Year-to-date, TSM has declined -37.17%, versus a -18.46% rise in the benchmark S&P 500 index during the same period.

Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.

More...