Buffett buys into financials

City A.M. Reporter

EN Buffett’s Berkshire Hathaway sold shares in industrial, consumer and capital goods companies during the third quarter and added to positions in financial shares, according to a regulatory filing yesteday that gave a small peak into his latest thinking.

Buffett no longer held stakes in used car retailer Carmax, home improvement retailer Home Depot or waste manager Republic Services as of 30 September, according to a quarterly holdings report with the US Securities and Exchange Commission.

Berkshire did not show stakes in information manager Iron Mountain or power company NRG Energy either. All five companies were listed in his second-quarter filing.

“I think that his reduction of positions like Home Depot and Carmax ... suggests a little bit of a change in a cyclical perspective,” said Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, California.

Yoshikami, who invests $1bn and owns Berkshire stock, said it could indicate a more muted outlook on the economy.

Buffett, the “Oracle of Omaha,” is one of history’s most famed stock pickers. The moves made by the 80-year-old investor are scrutinized in minute detail, particularly by adherents to his style of value investing.

While Buffett largely reduced or sold holdings in consumer and capital goods companies in the quarter, he added to his position in bank Wells Fargo and took a new stake in Bank of New York Mellon.

Buffett’s holdings in his five largest positions remained mostly the same during the quarter, except for the increase in his Wells Fargo stake and a decrease in Procter & Gamble Co shares.

“It’s pretty clear to me he is bullish on the IS and being pretty defensive, and thinks financials are an undervalued sector,” Yoshikami said.

The report showed a value of US equity holdings of $48.56bn at 30 September, up from $46.44bn at 30 June.