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Warren Buffett’s Q4 portfolio shifts: New bet on Constellation, Apple sales paused
Key points:
- Buffett ceased selling Apple shares after a year of reductions, maintaining 300 million shares, and initiated a $1.2 billion investment in Constellation Brands, highlighting confidence in the alcohol sector's pricing power and demand.
- Berkshire Hathaway's cash reserves have surged to nearly $325 billion, benefiting from high interest rates while Buffett remains patient for significant investment opportunities.
- Significant cuts in Citigroup (-73%) and Bank of America (-14.7%) reflect a reduced enthusiasm for big banks, while the complete exit from S&P 500 ETFs suggests caution regarding broad market valuations.
Warren Buffett’s Berkshire Hathaway released its Q4 2024 13F filing recently, offering a fresh look at what the Oracle of Omaha bought and sold during the final months of the year. This quarter, Buffett finally stopped selling Apple after a year of cuts, placed a new bet on Constellation Brands, and continued trimming his financial holdings. Meanwhile, Berkshire’s legendary cash pile is now estimated to be approaching a staggering $325 billion.
Key moves: What Buffett added, cut, and exited
Additions and new positions:
Notable Highlights:
- New Bet: Constellation Brands (STZ) – A $1.2B investment in a top alcohol brand known for its strong pricing power and steady dividend (1.5%).
- More Energy Exposure: Added Occidental Petroleum to total 264.2M shares ($13.05B)—continuing his long-term bullish stance on oil and gas.
Reductions:
Notable Highlights:
- Biggest Cut: Citigroup -73% - Buffett’s largest financial trim this quarter, marking a sharp retreat from big banks.
- More Bank of America Selling: -14.7% of BAC, continuing from Q3 and totaling a 23.7% reduction over two quarters.
Exited Positions Entirely:
- Ulta Beauty: Sold out completely after a short-lived investment.
- SPY (S&P 500 ETF) and VOO (Vanguard S&P 500 ETF): Fully exited both S&P 500 ETFs, possibly signaling concerns about high market valuations and the relevance of active investing.
Key takeaways from Q4 2024:
Cash Pile Nears $325 Billion
- Buffett’s legendary cash reserves continue to grow, now estimated at close to $325 billion, up from a record $150 billion just 18 months ago.
- High interest rates mean this cash hoard is earning significant income while Buffett remains patient for bigger opportunities.
Finally Done Selling Apple
- After four quarters of trimming his largest holding, Buffett paused, holding steady at 300M shares ($75.1B), still 28% of Berkshire’s portfolio, down from 51% before his sales.
- Buffett previously suggested these sales were for “tax purposes”, not a lack of confidence in Apple’s long-term prospects.
New Bet on Constellation Brands: A Play on Strong Brands and Cash Flow
- Buffett’s $1.2B bet on Constellation Brands signals confidence in the alcohol sector’s pricing power and stable demand.
- The company has a 1.5% dividend yield, and its Modelo brand is now the #1 beer in the U.S. - making this a potential long-term compounder.
Still Cooling on Financial Stocks
- Massive Cut in Citigroup (-73%) and continued trimming of Bank of America (-14.7%) highlight his shrinking enthusiasm for big banks.
- Financial and tech stocks still make up 65.68% of Berkshire’s portfolio, but Buffett is clearly narrowing his exposure to weaker players.
Dumped S&P 500 ETFs – A Signal on Market Valuations?
- While the SPY and VOO positions were small, selling them completely could reflect Buffett’s view that broad-market valuations are stretched.
- The S&P 500’s P/E ratio is well above its historical average, possibly making it less attractive than hand-picked individual stocks.
Buffett Loves Dividend Stocks, Still
- Nine of his top 10 holdings pay dividends, emphasizing his focus on cash-generating businesses. Below are the 12-month dividend yields of his top holdings:
- Apple: 0.41%
- American Express: 0.90%
- Bank of America: 2.13%
- Coca-Cola: 2.82%
- Chevron: 4.25%
- Occidental Petroleum: 1.83%
- Moody’s: 0.65%
- Kraft Heinz: 5.53%
- Chubb: 1.36%
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Final takeaways: Buffett’s market outlook for 2025
- Patience is Key: With cash near $325B, Buffett is clearly waiting for bigger opportunities.
- Selective Buying: Adding Constellation Brands signals confidence in consumer staples with pricing power.
- Cautious on Valuations: Dumping S&P 500 ETFs may hint at skepticism about broad market valuations.
- Loyal to Quality: Apple remains his top bet, and dividends remain a cornerstone of his strategy.
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