Warren Buffett’s Berkshire Hathaway revealed intriguing shifts in its investment strategy during the third quarter, adding new positions in Domino’s Pizza and Pool Corp. while trimming holdings in long-time favorites like Apple and Bank of America.
The latest SEC filing offers a glimpse into the evolving appetite of the Oracle of Omaha.
A slice of the pie: Berkshire’s new Domino’s investment
Berkshire’s newfound craving for Domino’s translated into a 1.28 million share stake worth approximately $549 million as of September 30th.
This investment suggests confidence in the pizza chain’s ability to navigate the current economic landscape, where value-oriented dining options are gaining traction.
Like other fast-food giants such as McDonald’s, Domino’s has been actively promoting deals to attract budget-conscious consumers, many of whom are foregoing pricier sit-down restaurants in favor of fast casual or delivery options.
Berkshire takes a dip with Pool Corp.
Beyond pizza, Berkshire also dipped its toes into the pool supply market, acquiring 404,000 shares of Pool Corp., a leading distributor of swimming pool supplies, valued at around $152 million as of September 30th.
While Pool Corp. noted “soft” demand for new pool construction last month, the company highlighted the resilience of non-discretionary repair and maintenance services for existing pools, a factor that may have attracted Berkshire’s interest.
Market reaction: Domino’s and Pool Corp. shares rise
News of Berkshire’s investments sent ripples through the after-hours market, with Domino’s shares rising 6.9% and Pool Corp. shares climbing 5.7%.
This positive response is a common phenomenon following Berkshire’s investment disclosures, often interpreted by investors as a “seal of approval” from the renowned value investor.
While embracing pizza and pool supplies, Berkshire continued its trend of accumulating cash.
The Omaha-based conglomerate’s cash and cash equivalents nearly doubled to a staggering $325.2 billion as of September 30th.
This cash accumulation coincides with a significant reduction in stock purchases and a halt in share buybacks for the first time since 2018.
In the third quarter alone, Berkshire sold $36.1 billion of stocks while purchasing only $1.5 billion.
For the year, stock sales totaled $133.2 billion—primarily Apple, followed by Bank of America—compared to just $5.8 billion in purchases.
While Buffett remains tight-lipped about the precise reasons behind these strategic shifts, several factors may be at play.
Market observers speculate that tax considerations and potentially inflated valuations are influencing his decisions.
The substantial cash reserves provide Berkshire, with its $1.01 trillion market capitalization, the flexibility to make significant acquisitions under Buffett’s continued leadership at the age of 94.
Portfolio adjustments: a glimpse into Berkshire’s Holdings
Beyond the headline-grabbing Domino’s and Pool Corp. investments, Berkshire’s latest filing reveals other notable portfolio adjustments.
The conglomerate increased its stake in aircraft parts maker Heico while completely divesting its holdings in flooring retailer Floor & Decor.
Berkshire also trimmed positions in Capital One, Charter Communications, Brazilian digital bank Nu Holdings, and cosmetics chain Ulta Beauty.
The near-complete sale of Ulta Beauty shares, just a short time after disclosing an initial investment in August, represents a particularly rapid turnaround.
Ulta shares fell 3.8% after hours.
Berkshire’s vast portfolio continues to encompass a diverse range of businesses, including Geico car insurance, BNSF railroad, and various consumer, energy, industrial, and retail companies.
Thursday’s filing does not say whether Buffett or his portfolio managers Todd Combs and Ted Weschler are responsible for individual investments.
Neither Domino’s nor Pool have issued a statement or released any comments on the matter.
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