🍏 Buffett Sold 10 Million Apple Shares in Q4!

🐺 Hi pack-mates,

This is Howling Markets, the newsletter that covers century-old investment strategies, cutting-edge cryptocurrency prototypes and everything in between!

Today we will be covering:

• Education: How Does Buffett Pick His Stocks? 📊

• Craig Wright Calls Witnesses to The Stand! 👊

• Buffett Sold 10 Million Apple Shares in Q4! 🍏

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

How Does Buffett Pick His Stocks?

Despite the very slim chance that one of our readers is not familiar with one of the greatest investors of all time, let’s make a proper introduction worthy of the name Buffett.

Warren Buffett is the world’s most successful value investor with a net worth of over $115 billion. Despite his 93 years of age, he is still chairman and CEO of his investment company, Berkshire Hathaway, which under Buffett’s management has returned +3,600,000% to its Class A shares’ investors since 1965.

But how did Buffett manage to achieve such a surreal return?

Even though one might think that to achieve these returns Buffett must have used some sort of secret computer-optimized strategy, Buffett learnt all his tricks from his Columbia Business School’s professor Benjamin Graham, considered to be the father of the value investing strategy.

This strategy consists of only investing in productive assets whose price is trading below its intrinsic value. Buffett believes that anything that does not generate a cashflow can be defined as a speculative asset and cannot be considered a great investment regardless of its price.

In one of his latest interviews Buffett said that if he would be offered to buy all the Bitcoins in the world for $25, he wouldn’t buy them because we wouldn’t know what to do with them. The only thing he could do would be to resell them to someone else hoping that the counterpart would be willing to pay more than he did.

However, to give you a better insight into Buffett’s mind, he also added that buying speculative assets is like spending money in a casino and betting against the house. He would never put himself in such a position, rather, he would purchase the casino’s roulette wheels.

As a matter of fact, Buffett recently invested a billion dollar in NuBank, a Brazilian fin-tech bank heavily invested in Bitcoin. NuBank is not set to profit from Bitcoin’s price fluctuations, but rather from the commissions that they will charge to let their users trade the crypto.

Craig Wright Calls Witnesses To The Stand!

A couple of weeks ago we covered the beginning of the trial which might potentially become the most important revelation since the dawn of cryptocurrencies: the COPA vs Craig Wright trial.

In short, the trial started when COPA sued Craig Wright for forgery of documents that would prove that he is the anonymous developer that goes by the name of Satoshi Nakamoto.

Since the start of the trial, Wright has deposited some evidence on which he has been questioned and cross-examined until last Wednesday. On Thursday, instead, the self-proclaimed Satoshi was allowed to bring three witnesses to the stand to be questioned by COPA’s lawyers.

However, from what transpired of Thursday’s session, these witnesses couldn’t make a strong statement in favor of Wright as COPA’s lawyers pushed the idea that 15-year-old facts can be misremembered.

Friday will be the last day of the trial and Wright will be able to call another three witnesses. How do you believe this trial is going to end?

Today’s Howling Question

And now, it is time for our howling question!

In the section about Berkshire’s portfolio I have attached the performance of the company’s Class B shares, but did you know that these Class Bs have an older sister?

Can you guess the price of Berkshire’s Class A shares?

a)  $25

b)  $150

c)  $2,000

d)  $7,500

e)  $600,000

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

Buffett Sold 10 Million Apple Shares in Q4!

Together with value investing, another great point about Buffett’s investment strategy is summarized by his statement: “Diversification is for people who don’t know what they are doing”. But what does this mean?

To fully satisfy his value investing requirements when analyzing a company, Buffett needs to grasp an in-depth understanding by scanning their financial statements, attending general meetings and much more. Investing in a company using this method is extremely time consuming, but it guarantees that a great majority of the holdings are performing great.

Now imagine loosening all standards just by the sake of diversifying. Certainly, the volatility of the returns would drop significantly, but also the returns themselves would fall and the bad investments would skyrocket.

Because of this, as of the 14^th of February 2024, the almost $350 billion Berkshire Hathaway portfolio only contains 41 companies.

Additionally, the top 5 stocks by market value make up more than 80% of the entire company’s portfolio. These five stocks are:

• Apple (Ticker: AAPL): $174 billion, 50.19% of total portfolio

• Bank of America Corp. (Ticker: BAC): $35 billion, 10.01% of total portfolio

• American Express Co. (Ticker: AXP): $28 billion, 8.18% of total portfolio

• Coca Cola Co. (Ticker: KO): $23 billion, 6.79% of total portfolio

• Chevron Corp. (Ticker: CVX): $18 billion, 5.49% of total portfolio

However, it is important to notice that Berkshire has significantly skimmed their holdings over the last quarter, dropping from 49 companies to just 41. Also, most of the remaining 41 companies have seen a reduction in position size, including Apple’s which has been slimmed by 10 million shares.

Equity and Debt Markets Update ⚖️

And now, our daily markets update!

Thursday was a very straight forward day for the stock market: the price opened right where it left off and it kept climbing without hesitation over the $5,000 threshold, closing +0.58%.

On the other hand, the debt market extended its fall in yields started on Wednesday. On Thursday, the 10 year US government bond yield benchmark fell by almost 2% throughout the trading session before significantly recovering and closing just -0.54%.

Answer

The correct answer is e) $600,000

If you thought that I had slipped on my keyboard and added a couple of zeros by mistake, you would be wrong. Berkshire Hathaway Class A Shares (Ticker: BRK.A) are the most expensive shares in the world!

Class A shares were the only equities originally issued by the company, however, over the years the price rapidly grew and the investors started to demand a cheaper alternative.

As a result, Berkshire decided to issue its Class B shares programmed to follow Class As at 1/1,500^th of the price.

Howl-Worthy Memes 😂

🐺 See you next time!

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