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Is Berkshire Hathaway secretly stacking up shares in one or more companies?
Background
$Berkshire Hathaway-A (BRK.A.US)$ $Berkshire Hathaway-B (BRK.B.US)$ CEO Warren Buffett has garnered attention from professional and individual investors as he has made his way through Wall Street multiple times. Since taking on the role of CEO in the mid-1960s, as of the closing bell on March 14th, his total return on the company's Class A shares (BRK.A) has reached 4,938,103%. To put it in perspective, this is 146 times the return in 2019. The total return of the S&P 500, including dividends paid, during the same period.
The familiar name of the 'Oracle of Omaha' is not always correct, but his track record suggests he has the talent for finding hidden value. This is why investors anxiously await Berkshire Hathaway's filing of Form 13F with the Securities and Exchange Commission (SEC).
Berkshire Hathaway's 13F is a powerful tool for investors
Form 13F is a quarterly filing requirement for asset managers that manage at least $100 million in assets for institutional investors. As of March 14th, Mr. Buffett and his team held $366 billion in investment assets, dispersed among 45 stocks and 2 index funds.
The value of 13F is that investors can easily see what the smartest and most successful asset managers on Wall Street are buying, selling, and holding. These filings can provide valuable insights into intriguing stocks and trends that pique the interest of top Wall Street investors.
Confidential stocks that Berkshire Hathaway is likely to purchase include:
Among the remaining 13 financial stocks, Berkshire already owns a few companies such as Bank of America, American Express, Citigroup, etc., as well as JP Morgan Chase, Goldman Sachs, Wells Fargo. The possibility of Buffett secretly re-entering JP Morgan Chase, Goldman Sachs, and Wells Fargo is very low, and if it is one of the top 3 holdings currently held by Berkshire, there may be buying activity through form 13F.
This leaves 7 remaining options.
$Morgan Stanley (MS.US)$ (MS 2.24%)
Royal Bank of Canada
Having observed Buffett's trading activities for a long time, I cannot recall a time when he showed great interest even if he had mentioned Canadian banks. Furthermore, while the Omaha oracle plans to actively participate in US landfill projects (such as Bank of America in 2011), European banks are not his preference. This makes it highly likely that HSBC, UBS, Toronto Dominion, and Royal Bank of Canada will be excluded from the discussion.
Furthermore, taking it a step further, Berkshire's investment team has just cleared out the portfolio of Markel and Globe Life, indicating that they probably do not have a strong desire to invest in international-based insurance companies like Chubb.
As a result, the two companies that meet Warren Buffett's desired criteria are Morgan Stanley and Mitsubishi UFJ Financial Group, known as "MUFG".
It is not possible to exclude the possibility of Morgan Stanley as a potential "secret" acquisition target for Berkshire. The company's valuation is 12 times the previous year's profit, and a significant portion of its revenue and profit comes from its wealth management division. In theory, asset management should help protect Morgan Stanley from the inevitable downturn in the US and global economy.
However, the financial stock that makes the most sense for Mr. Buffett and his team to secretly buy is MUFG.
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