Warren Buffett's Berkshire Hathaway reveals $6 billion bet on AbbVie, Merck, Pfizer, and other 'big pharma' stocks

Warren Buffett's Berkshire Hathaway reveals $6 billion bet on AbbVie, Merck, Pfizer, and other 'big pharma' stocks
Warren BuffettAP Images

  • Warren Buffett's Berkshire Hathaway added AbbVie, Bristol Myers Squibb, Merck, and Pfizer to its stock portfolio in the third quarter.
  • The billionaire investor's company disclosed the $6 billion worth of pharmaceutical bets in a regulatory filing on Monday.
  • Berkshire held stakes worth more than $1.8 billion in each of AbbVie, Bristol Myers Squibb, and Merck as of September 30. It owned $136 million of Pfizer stock as well.
  • Buffett and his team also trimmed their massive Apple stake, slashed holdings such as JPMorgan and Barrick Gold, and exited their billion-dollar position in Costco.
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Warren Buffett's Berkshire Hathaway plowed billions of dollars into Pfizer, Merck, and other pharmaceutical stocks in the third quarter, a regulatory filing revealed on Monday.

The famed investor's company disclosed new stakes worth more than $1.8 billion in each of AbbVie, Bristol Myers Squibb, and Merck, as well as $136 million in Pfizer stock.
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Buffett and his team may be betting that "big pharma" companies will play an increasingly important role in the global economy during and after the coronavirus pandemic. Indeed, Pfizer announced last week that its COVID-19 vaccine had proven extremely effective in a late-stage trial, raising hopes of a faster return to normal than expected.

Read More: A Wall Street expert says the dramatic shift in stocks last week reeks of investor complacency — and warns that many favorite trades remain vulnerable to losses

Berkshire made several other changes to its portfolio. It added a $280 million stake in T-Mobile, and boosted its General Motors and Kroger holdings. On the other hand, the company trimmed its position in Apple — easily its biggest holding — by about 3.7% or 36 million shares.
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The conglomerate also slashed its JPMorgan stake by more than 95%, from around 22 million shares worth more than $2 billion at the end of June to fewer than 1 million. It also sold more Wells Fargo shares, and exited a position in Costco that was worth more than $1.3 billion at the end of the second quarter.

Elsewhere, Berkshire cut its Barrick Gold position by more than 40%, despite only investing in the gold miner for the first time in the second quarter. It also reduced its holdings in PNC and M&T Bank. Read More: Goldman Sachs says to load up on these 22 energy stocks set to soar as the market recovers — and details 10 to ditch
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Close watchers of the company were expecting significant changes to Buffett's portfolio. Berkshire's third-quarter earnings showed $17.6 billion in stock purchases and $12.8 billion in stock sales, equating to $4.8 billion in net stock purchases in the period.

Moreover, Berkshire announced $19 billion worth of investments last quarter. Those included buying Bank of America and Snowflake stock, acquiring 5% stakes in five Japanese trading companies over the 12 months to August, and striking deals with Dominion Energy and Scripps.

Berkshire's roughly $6 billion in drug stocks and its flurry of other purchases signal a bullish turn for Buffett and his team. After all, Berkshire slashed its financial holdings and sold its entire stakes in the "big four" US airlines at a loss in the second quarter.
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