3 stocks Warren Buffett is selling in 2023, and 1 he can’t get enough of

Warren Buffett Known as one of the most successful investors in history. His long-term record of beating the market supports this view.So when he buys Berkshire Hathawayof (NYSE: BRK.A) (NYSE: BRK.B) The investment portfolio deserves attention.

Unfortunately, investors haven’t been too excited about Buffett’s portfolio lately. He was a net seller of stocks through the first nine months of 2023. He sold $32.8 billion in company stock and purchased only $9.1 billion in new investments.

Buffett cut several major investments from his corporate portfolio last year, but he continues to make one big investment. Here’s what investors need to know.

Close-up of Warren Buffett's face.

Image source: The Motley Fool.

Three stocks that Buffett is selling

In 2023, Buffett cut important positions at Activision Blizzard, life value (NYSE:HPQ)and Chevron (NYSE:CVX).

The sale of Activision Blizzard was foreseeable. He purchased a large amount of stock in the company in early 2022 after the company announced the acquisition. Microsoft.

That’s a Classic arbitrage gameplayBuffett purchased the shares at a discount to the purchase price with the expectation that the deal would be completed and that he would make a profit from holding the shares.

He ended up holding no stock until the deal closed, selling most of it in the second quarter and the rest in the third quarter. The deal was completed in October 2023, when he completely exited his position in the stock. Still, it worked out well for him.

Buffett’s change of attitude toward HP is somewhat surprising. He established a large position in the first quarter of 2022, exceeding 10% of outstanding shares. He recently added to this position in the first quarter of 2023. But when he started selling shares in September, the selling continued into November. His current position has been reduced by more than half from its highest point.

Buffett is never afraid to admit he’s made a mistake, and that seems to be the case with HP. As 2023 wears on, the lasting hangover from the COVID-19 work-from-home boom appears to be affecting HP’s results.

The recovery hasn’t been as quick as expected, and the long-term outlook for HP’s two main businesses – sales of PCs and printers – isn’t looking good. So Buffett is cutting his losses and keeping going.

His other big trade in 2023 was relatively successful for the Oracle of Omaha. He bought a large stake in Chevron in the first quarter of 2022 as the conflict between Russia and Ukraine pushed up oil prices.

Chevron has managed to weather ongoing tensions, and the stock’s total returns, including dividends, outperformed other companies S&P 500 Index Until the third season last year.

But Buffett was content with reducing his Chevron holdings because he was more interested in owning stock in another oil and gas company. This is one stock he can’t stop buying during 2023, and there’s a good chance he’ll keep buying more. 2024.

The stocks he keeps buying

Throughout 2023, Buffett continued to add more shares to one of his holdings in Berkshire Hathaway, occidental petroleum corp. (NYSE:OXY).

Berkshire Hathaway invested $10 billion to help Occidental Petroleum acquire Anadarko, thereby establishing its position in the company. In exchange, Berkshire received 100,000 preferred shares of the oil and gas company and paid an 8% annual dividend.

But when Buffett acquired Chevron in 2022, he built a larger position in the company. At the time he purchased about 15% of the company’s outstanding shares, a position he has steadily increased since then.

Following its latest acquisition in December, Berkshire now controls nearly 28% of Occidental’s common stock. At the same time, though, Occidental is exiting Berkshire’s preferred stock, offsetting Buffett’s moves to increase his exposure to the company.

Occidental Petroleum is an interesting investment for Buffett. Its balance sheet is not nearly as strong as that of rival oil companies including Chevron. After acquiring Anadarko, it faced a challenging environment caused by COVID-19. It had to suspend its dividend as a result, cash flow dried up due to low oil prices.

But management has been able to keep debt under control while not being afraid to use it to expand the business.

For example, its recent acquisition of oil and gas producer CrownRock will result in a significant amount of debt entering the balance sheet. Management plans to sell assets to pay down debt quickly, much like it did with the Anadarko acquisition. That makes Occidental a riskier investment, but Buffett expressed great confidence in CEO Vicki Hollub.

He is particularly interested in Occidental’s position in the Permian Basin. As a linchpin of Occidental’s business, this makes the company’s stock more vulnerable to fluctuations in the price of West Texas crude, as falling prices would make it unprofitable for Occidental to continue drilling. On the other hand, if oil prices move higher, the company should be one of the sector’s biggest winners.

With enterprise value to EBITDA trading at 5.5x, they’re at a slight discount to Chevron (6.3), with room for strong upside if oil prices move higher again.

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Adam Levy The Motley Fool works at Microsoft. The Motley Fool is employed and recommended by Berkshire Hathaway, HP, and Microsoft. The Motley Fool recommends Chevron and Occidental Petroleum. Motley Fool has disclosure policy.

3 stocks Warren Buffett is selling in 2023, and 1 he can’t get enough of Originally published by The Motley Fool

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