The world’s leading value investor has changed up his portfolio considerably since the start of the coronavirus pandemic. Earlier this year, Warren Buffett ended up dumping most of his position in the airline sector due to plummeting revenue figures. As it turns out, the Oracle of Omaha now thinks that the U.S. banking sector is showing signs of weakness as well. On Friday, news broke that Buffett had dumped his stake in JP Morgan. Instead, adding shares in one of the largest gold mining companies in the world, Barrick Gold (NYSE:GOLD).
According to a new 13-F regulatory filing that Buffett’s company, Berkshire Hathaway filed, the company added an extra 20.9 million new shares of Barrick Gold. This totals around $563.5 million in extra shares for the quarter. While it’s not a gigantic position to hold for a company of Berkshire’s size, it does signify a significant shift in the company’s investment philosophy.
Historically, Warren Buffett hasn’t bought too many gold mining companies in the past. Only in the last year or so have gold prices seen a dramatic uptick, which has also helped widen the profit margins of mining companies. Gold currently is trading at around $1,935 per ounce, a little shy of the $1,952 all-time high the commodity reached a little while ago before retreating a little.
On the flip side, not only did Berkshire Hathaway sell its stake in JP Morgan, but the company also gave up its remaining stake in Goldman Sachs, which amounted to around 1.9 million shares. Buffett’s company also cut its stake in Wells Fargo as well.
Goldman Sachs was a company Buffett bought up significantly back in the 2008 financial crisis, where banks needed extra investment in order to solve their immediate solvency issues. While Buffett bought the stock at a good discount, his decision to dump most of his holdings in the U.S. banking sector is a decision that has many investors a little bit worried about the macroeconomic implications for the country.
At the same time, Buffett also bought up shares of Kroger, adding an extra 3 million shares of the grocery chain during this past quarter. In total, this investment came in at $742.6 million, still relatively small by Berkshire standards but still noticeable nonetheless.
Shares of Barrick Gold didn’t react much to the news in after-hours trading. However, they will likely shoot up significantly on Monday morning, as a thumbs up from Warren Buffett tends to have that effect on company’s stock. For the most part, Barrick has been doing extremely well for itself for far in 2020.
Barrick Gold Company Profile
Based in Toronto, Barrick Gold is one of the world’s largest gold producers, operating mines in North America, South America, Australia, and Africa. In 2018, the firm produced roughly 4.5 million attributable ounces of gold and more than 380 million pounds of copper. Gold production will rise following the acquisition of Randgold at the end of 2018. As of Dec. 31, 2018, Barrick had 75 million ounces and 7.6 billion pounds of proven and probable gold and copper reserves, respectively, including recently acquired assets. – Warrior Trading News
