US-listed shares of TSMC fell 6% Wednesday after Warren Buffett’s Berkshire Hathaway sold roughly 86% of its investment last quarter.
Berkshire had first disclosed its $4.1 billion position in November, and the sale marks a reversal of the firm’s usual tendencies to hold investments for years.
Shares had climbed about 18% from when they were first purchased.
Warren Buffett’s luck changed this year, allowing him to spend a record sum on stocks and end his deal drought. Here are his 6 highlights of 2022.
Warren Buffett spent a record sum on stocks and made a major acquisition in 2022.
The Berkshire Hathaway CEO tore into bitcoin, adjusted some overseas bets, and gave a surprise gift.
Here are the investing icon’s 6 highlights of 2022.
Warren Buffett’s luck changed in 2022. After years of battling to find bargains and watching Berkshire Hathaway‘s cash stack up, the famed investor seized his chance to put his conglomerate’s mountain of money to work.
Buffett spent a record sum on stocks, executed a major acquisition, and made some striking changes to his overseas bets. He also crowed about four of Berkshire’s key holdings in his yearly letter, trashed bitcoin at the annual shareholders’ meeting, and made a surprise donation to his children’s charities.
Here are Buffett’s 6 highlights from 2022:
The annual letter
Buffett published his famous annual letter to Berkshire shareholders in February.
The investor vented his frustration with Berkshire’s mammoth $144 billion cash pile, blaming a lack of bargains in the stock market. He also celebrated the “Four Giants” among Berkshire’s businesses: insurance, railroads, energy, and its enormous Apple stake.
Moreover, Buffett appeared to respond to criticism of his tax practices by noting Berkshire paid $3.3 billion of federal income tax in 2021 — nearly 1% of all the corporate income taxes collected by the US government that year.
Buffett struck a deal to buy Alleghany for nearly $12 billion in March. Berkshire completed its takeover of the insurer in October, ending a years-long drought on the acquisition front.
The investor showcased his trademark approach to dealmaking, which prizes trust and simplicity. He proposed the merger over dinner with Alleghany’s CEO, who previously ran a Berkshire subsidiary, and the pair formally announced a deal less than two weeks later.
Buffet also refused to budge on the deal terms, and when Alleghany enlisted Goldman Sachs as a financial advisor, he insisted the investment bank’s fee was subtracted from Berkshire’s offer price.
An epic buying spree
Berkshire plowed a net $41 billion into stocks in the first quarter of 2022, setting a new record for its quarterly spending on equities.
Buffett and his team built large stakes in HP, Chevron, Occidental Petroleum, Citigroup, Paramount, and Taiwan Semiconductor in the first nine months of 2022. Berkshire also spent over $5 billion on buybacks and made other sizeable purchases, lifting its spending on stocks and acquisitions for the year to an astounding $70 billion or so.
The annual meeting
Buffett hosted Berkshire’s annual shareholder meeting in his hometown of Omaha, Nebraska in April, after two years of virtual gatherings due to the pandemic.
The investor called out the reckless speculation in the stock market, underlined the grave threat posed by inflation, and declared he wouldn’t pay $25 for all the bitcoin in the world.
Buffett made some big moves in 2022 that deserve special attention. For example, he poured a total of about $30 billion into Chevron and Occidental, propelling the pair of oil-and-gas companies onto the list of Berkshire’s most-valuable holdings.
The investor and his team also revealed in November they had boosted their billion-dollar bets on Japan’s five largest trading houses.
In contrast, they sold BYD shares for the first time in 14 years. Berkshire has now slashed its position in the Chinese electric-vehicle maker by around 22%, and pocketed an estimated $1.2 billion profit from the disposals.
An unexpected gift
Buffett made his usual annual donation of Berkshire stock in June, dividing the $4 billion gift between the Bill & Melinda Gates Foundation and four of his family’s charities.
Unexpectedly, he contributed a further $759 million worth of Berkshire stock to his three children’s foundations for Thanksgiving, saying he was proud of their charitable work and wanted to show his appreciation.
7/7 SLIDES
Shares of TSMC dropped 6% early Wednesday after Warren Buffett’s Berkshire Hathaway dumped most of its stake just months after buying the Taiwanese chipmaker’s stock.
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The sale, which was disclosed in fourth-quarter 13F filings late Tuesday, made up roughly 86% of the Omaha-based firm’s position.
It also marked an unusually quick turnaround for Buffett’s company, which typically holds onto investments for years instead of a few months.
Berkshire Hathaway first revealed its $4.1 billion stake in TSMC on November 14. It’s now down to about $618 million.
Berkshire sold its shares after they had climbed about 18% from when they were first purchased. By the middle of 2022, chipmakers across the board had been reducing production to deal with oversupply issues.
Meanwhile, TSMC seems to have been caught up in the artificial intelligence boom that has pushed chip-makers like Nvidia as well as little-known tech companies higher. The popularity of OpenAI’s language tool, ChatGPT, sparked the massive investor interest after launching in November. TSMC stock has enjoyed an almost 30% rally to start 2023.
Last month, TSMC forecasted that its revenue could fall as much as 5% this quarter, and that it could face more weak demand. This week, however, the company’s board approved a capital injection of up to $3.5 billion into its Arizona unit.
At the end of 2022, Berkshire made several other changes to its stock portfolio. It not only slashed its stake in the TSMC, but did so with US Bancorp, BNY Mellon, and Activision Blizzard. In the same stretch, it added to its position in Apple.
