On August 14th, we had a 13F filing update in the U.S., which gives more insight about the smart money and how it is deploying its capital. Investors are always keen to know and relate this information to their trading strategy. For retail traders, this information can be seen as confirmation of whether their investment strategy is correct and how they can fine-tune it.
The most significant headline of the 13F filing was about Berkshire Hathaway’s activity. It has purchased gold mining stock, Barrick Gold, a Canada-based mining company. The Buffet’s position in Barrick Gold is worth nearly $565 million.
The Oracle of Omaha, Warren Buffet, reduced Berkshire Hathaway’s positions in U.S. banks: JPMorgan, Wells Fargo, and PNC financial holdings. It is critical to mention that Buffet still holds some U.S. banks, and Bank of America is one of them.
Warren Buffet’s fund has dumped its entire position in Goldman Sachs, the giant of Wall Street. Goldman Sachs’s stock has outperformed other Wall Street banks due to its solid results in trading. However, none of these Wall Street giants are positive for the year; they are still trading in negative territory.
Overall, it may not be a stretch statement to say Warren Buffet’s fund was more busy selling its positions– it sold its airline stocks–than buying stocks during the coronavirus pandemic.
The Saudi Sovereign Wealth Fund exited its positions in Disney, Facebook, Boeing, and BP. Disney stock is mainly beaten down due to coronavirus, as the Disney theme parks are still under the influence of Covid-19. Apart from that, Disney is the stock among its peers that can see massive upside in the coming quarters because of its new initiatives such as Disney+ streaming and also Disney premiering its new movies online—a new territory.
The BP stock is very much an energy story. BP is making efforts in the renewable sector; these bets can pay off in the long term. Facebook is the giant in the social media place, and with the introduction of Instagram Reel, it is ready to take on its competition, TikTok. As for the Boeing stock, yes, the company is under pressure as the entire airline sector is suffering massively. However, most of the airlines are selling their old planes, and when the traffic does return, we will likely see a surge.
Pershing Square, which acts as more of an event-driven fund, has exited its position in Berkshire Hathaway and Blackstone. The fund has increased its exposure in the restaurant industry, as the coronavirus has adversely influenced the sector. There are several bargains here, such as Chipotle.
Another significant trend that we have also seen during the 13F filing is the exodus in the technology sector. Stan Druckenmiller’s Duquesne has reduced its tech exposure in Netflix, Amazon, and Facebook. The new positions that were added are JPMorgan, T-Mobile, and Microsoft.
There is no doubt that pretty much all tech stocks are overbought, and they have experienced a massive rally during the pandemic period. Yes, there could be more upside in the coming months, especially with the emergence of a second coronavirus wave and a shift in working patterns.
However, economic activity has started to march on its recovery path, and much of the hype around these tech stocks may ease off. Moreover, from a valuation perspective, the Nasdaq is significantly overvalued. Some sort of retracement is due, but the timing is yet unknown.
Chinese E-commerce sectors also saw some intriguing interest. Appaloosa fund added more of Alibaba stock in its portfolio, and this is the biggest holding in its portfolio, at a value of $728 million.