Warren Buffett is scooping up stocks.
Institutional investors that have at least $100 million in equity assets under management must report their holdings to the U.S. Securities and Exchange Commission on a quarterly basis via Form 13-F. As a result, retail investors get to see behind the curtain of some of the biggest and most successful hedge funds and money managers in the world. Berkshire Hathaway (ticker: BRK.A, BRK.B) CEO Warren Buffett may be the most popular and successful investor in history, and Berkshire's 13-F is the most anticipated filing on Wall Street each quarter. Here are eight stocks Warren Buffett has been buying.
AbbVie is one of several brand new health care stock positions Buffett took in the third quarter, and he may be betting on a favorable health care environment under President-elect Joe Biden. AbbVie is a pharmaceutical company and owner of leading drugs Humira and Imbruvica. AbbVie is holding an Investor Day event in December that may provide some clarity about key growth drivers Skyrizi and Rinvoq. AbbVie is also a classic Buffett value stock, trading at 8.1 times forward earnings and paying a 5.1% dividend. Buffett's brand new stake in AbbVie is worth about $2.1 billion.
Merck & Co. (MRK)
Sticking with the health care theme, Buffett has taken a brand new position in global pharmaceutical giant Merck. Merck's blockbuster cancer drug Keytruda has been approved for more than 20 indications and will remain on patent until 2028. In addition, Keytruda could see further indications approved in the future, such as breast and colon cancer. Merck also pays about a 3% dividend that is supported by robust cash flow from a diversified product portfolio. None of Merck's key brands will lose exclusivity until at least 2022. Buffett's new stake in Merck is worth about $1.8 billion.
Bristol-Myers Squibb Co. (BMY)
Bristol-Myers Squibb is a global pharmaceutical company that has a long track record of successful acquisitions and partnerships. The company's most recent high-profile deal was a $74 billion buyout of Celgene. Celgene has an impressive portfolio of cancer drugs, which typically generate strong pricing power despite ongoing political pressures for drug pricing reform. Bristol-Myers has six novel drugs in late-stage development that can help offset declining Revlimid sales starting in 2022. In the third quarter, Bristol-Myers' gross margins expanded by 6.1% to 76.3%. Buffett's stake in BMY stock is worth about $1.8 billion.
Berkshire confirmed its 2.2% ownership stake in cloud data company Snowflake before its high-profile initial public offering in September. The Snowflake purchase was a surprise to many Buffett followers given he has historically shied away from both tech stocks and IPOs. In reality, experts say it's likely Berkshire portfolio managers Todd Combs or Ted Weschler were responsible for the Snowflake buy rather than Buffett. Buffett may not have picked Snowflake personally, but he did hire Combs and Weschler, making Snowflake a second-degree Buffett stock. Berkshire holds 6.1 million shares of Snowflake worth about $1.6 billion.
T-Mobile US (TMUS)
Following its merger with Sprint, T-Mobile says it is now No. 2 in customers among U.S. wireless carriers, behind Verizon Communications (VZ) and just ahead of AT&T (T). T-Mobile doesn't pay a big dividend like other telecoms. However, Verizon and AT&T reported negative revenue growth last quarter. T-Mobile's revenue was up 74.2% and its net income was up 44% year over year thanks to the Sprint acquisition. Analysts expect the 5G network upgrade cycle to be a significant market catalyst in coming years, and Buffett may see T-Mobile as the best 5G play. Berkshire's new T-Mobile stake is worth $314 million.
Of Buffett's five new health care positions, Pfizer may have the most near-term upside. Pfizer recently reported its late-stage coronavirus vaccine candidate is 95% effective. Pfizer and partner BioNTech recently submitted an application for emergency approval for the vaccine in the U.S., and it could potentially be widely available sometime in 2021. In addition to the potential vaccine candidate, Pfizer has a diversified portfolio of brands, including Prevnar, Ibrance and Eliquis. The stock trades at a forward earnings multiple of just 10.6 and pays a 4.2% dividend. Buffett's new stake is worth $133 million.
Bank of America Corp. (BAC)
Buffett first invested in Bank of America in 2011 during the European Debt Crisis. Buffett has long been a strong believer in banks, but he has been dialing back his exposure to most of his bank stocks in recent quarters. Bank of America is the lone exception. In the third quarter, Buffett bought another 85 million shares of Bank of America, bringing his total stake up to 1.03 billion shares representing 11.9% ownership of the company. Buffett's $27.7 billion stake in Bank of America is Berkshire's second-largest stock holding, behind only Apple (AAPL).
General Motors Co. (GM)
While electric vehicle stocks have been all the rage in 2020, Buffett has opted to stay away from high-flying growth stocks like Tesla (TSLA), Nio (NIO) and Workhorse Group (WKHS) and stick with under-the-radar value stock General Motors. Unlike other EV stocks with bloated valuations and massive cash burn, General Motors trades at a forward earnings multiple of just 7.2 and reported $4 billion in net income in the third quarter. GM's profitable legacy business is helping fund a $27 billion investment in EV production. Berkshire holds 80 million shares of GM stock worth $3.4 billion.
Some Buffett buys:
-- AbbVie (ABBV)
-- Merck & Co. (MRK)
-- Bristol-Myers Squibb Co. (BMY)
-- Snowflake (SNOW)
-- T-Mobile US (TMUS)
-- Pfizer (PFE)
-- Bank of America Corp. (BAC)
-- General Motors Co. (GM)