On November 15, Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) said that the investment company eliminated its investment in Merck & Co (MRK.N) and reduced its stakes in AbbVie Inc (ABBV.N) and Bristol-Myers Squibb Co (BMY.N), as it pared its overall stock market investments.
In addition, Berkshire eliminated its minor stakes in Organon & Co (OGN.N), a Merck spinoff specializing in contraception and other women’s health products, together with telecommunications company Liberty Global Plc (LBTYA.O).
It revealed new investments of $475 million in Royalty Pharma Plc (RPRX.O), which buys drug royalties, and $99 million in flooring retailer Floor & Decor Holdings Inc (FND.N).
The changes were disclosed in a regulatory filing detailing Berkshire’s U.S.-listed holdings as of September 30.
After the market closed, shares of Royalty Pharma rose more than 5%, a common occurrence after Berkshire reveals new stakes. Royalty Pharma did not immediately respond to requests for comment.
By monitoring Berkshire’s investments closely, investors pick out where Buffett and his investment managers Todd Combs and Ted Weschler see the value. The filings do not say who bought and sold what, though Buffett generally handles larger investments.
While Berkshire ended September with $310.7 billion of equity holdings, it sold $2 billion more stocks than it bought in the third quarter, and for all of 2021, it has been a net seller.
Among Berkshire’s stock investments, about 41% are in Apple (AAPL.O), with another 29% in Bank of America Corp (BAC.N), American Express Co (AXP.N), and Coca-Cola Co (KO.N).
Despite having recorded at least $21.9 billion of stock buybacks this year, the sales and Buffett’s nearly six-year drought in buying large whole companies have contributed to Berkshire’s boosting its cash holdings to a record $149.2 billion.
Investors, who have seen Berkshire’s stock price significantly lag the Standard & Poor’s 500 (.SPX) since the end of 2018, have also been disappointed.
In the quarter, Berkshire’s share stakes fell 30% in AbbVie and 16% in Bristol-Myers.
In exchange for future royalty streams, Royalty Pharma helps fund late-stage clinical trials and product launches and sometimes buys royalties from drug developers.
Vertex Pharmaceuticals Inc (VRTX.O) treatments for cystic fibrosis, Biogen Inc’s (BIIB.O) Tysabri for multiple sclerosis, and AbbVie’s Imbruvica for various cancer manufacturers that brings in its larger revenue streams.
Despite the company’s share price recently trading about 50% above its initial public offering price in June 2021, it is still below where it closed on its first trading day.
Berkshire, based in Omaha, Nebraska, also owns dozens of businesses including the BNSF railroad, Geico auto insurance, and Dairy Queen ice cream.