Berkshire Hathaway CEO Warren Buffett has invested up to USD$8 billion into Verizon, Chevron and Marsh & McLennan. It was reported that Berkshire has been secretly buying up shares of unknown companies recently. Berkshire Hathaway has been actively reducing their stake in Kraft Heinz Co and General Motors. In a flurry of activity in the new year, Berkshire also trimmed their positions in Apple and banking stocks like JP Morgan Chase and PNC Financials.
Berkshire’s purchase sent the prices of Chevron and Verizon up in after hours trading. In a sign of confidence in the US telecom and energy markets, Warren Buffett purchase of both these companies comes as no surprised as his value investing method focuses on the quality of the balance sheet of these companies. A good way to understand his decision is to look at the P/E ratio of both the companies. Verizon has a P/E ratio of 12.60 and Chevron has a PE ratio of 15.34. P/E ratio is the share price divided by the sum of the earnings of the companies in the previous 12 months called trailing twelve months (ttm).
Berkshire Hathaway has also exited its position in gold mining company Barrick Gold Corp. Warren Buffett is known to be a person who has shied away from previous metals as he deems them more of an expense as oppose to an investment.