Warren Buffett Reveals Multibillion-Dollar Pre-Retirement Bets

Leave it to the no-nonsense, under-the-radar Berkshire Hathaway CEO Warren Buffett to reveal the most buzzed-about trading secret on Wall Street in a bureaucratic filing.

Berkshire’s latest Form 13-F, filed with the Securities and Exchange Commission, was made public Thursday after markets closed. It revealed a handful of new companies Berkshire has invested in, including stakes it sought to keep confidential earlier this year.

In Full Form

Berkshire’s 10Q filings this year suggested the holdings giant had added a sizable stake or stakes to its “commercial, industrial and other” investment categories. But Buffett’s firm also requested to keep at least one first-quarter investment confidential: This is a common strategy when building up stakes, one Buffett used in the past to accumulate holdings in Chubb, Chevron and Verizon. But when you’re the most famous investor on earth, even your quietest maneuvers garner Super Bowl-level viewership on trading floors, not to mention the sort of speculative guessing that comes in advance of the big game.

Given Buffett’s well-known investment philosophy, in which companies with reliable cash flows and a deep moat are king, speculative guesses ranged from defense contractor Lockheed Martin to construction equipment-maker Caterpillar and shipping giant United Parcel Service. Berkshire went in another direction and dropped a second-quarter surprise to boot:

• The mystery stocks that Berkshire started accumulating in the first quarter were homebuilders Lennar and DR Horton, as well as Nucor, America’s biggest steelmaker. That suggests, in particular, that Berkshire is going long on housing. Interest-rate cuts are coming, after all, aren’t they? Aren’t they?
• The big surprise, however, was a brand new, $1.6 billion stake in UnitedHealth, accumulated entirely during the second quarter. Berkshire steps in as the healthcare and insurance giant is reeling from soaring medical costs, facing a federal criminal fraud probe, and is warning its profits will drag for quarters to come.

Other companies Berkshire added in the second quarter were home security firm Allegion and billboard and outdoor advertising operator Lamar. It also pared its holdings in Bank of America and made further cuts to its remaining Apple shares, while divesting from T-Mobile, continuing a trend of moving money out of tech and financials.

Doubling Up: What Berkshire might see in UNH is value: The world’s largest healthcare company by revenue, it pays dividends (a quality shared by more than half the stocks Berkshire owns), and its shares have tumbled 46% this year. A turnaround would net a tidy sum, while the $1.6 billion position is but a fraction of Berkshire’s $300 billion portfolio, limiting risk. Of note, Scion, the investment firm of Big Short investor Michael Burry, also disclosed a new position in UNH on Thursday, meaning two “oracle” investors are making the same bet.