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Which shares has Warren Buffett been buying and what does it say about the stock market?

Warren Buffett at a Berkshire Hathaway AGM

A 13F filing last night revealed the stocks Warren Buffett – or more accurately, Berkshire Hathaway – bought between April and June. The report was interesting in a number of ways.

Buffett didn’t do much during the second quarter of 2023. But the Berkshire 13F provides some key points for investors to consider.

Betting on builders

The most interesting new additions to the Berkshire portfolio were Lennar, NVR, and DR Horton. All of these are US housebuilders.

In some ways, this is surprising. Each of the stocks is up around 35% since the start of the year and rising interest rates have been weighing on demand in the housing market.

The size of these investments indicates they might not have been initiated by Buffett himself. But why are Berkshire’s managers even looking at housebuilders at a time like this?

One reason is it looks as though interest rates in the US might not have much further to rise. That gives the construction industry a much clearer outlook.

Furthermore, lower demand in the property sector has been offset by a drop in supply. As a result, US housing inventory is at a 10-year low, which is supporting prices.

Overall, this is positive for US housing. Improving demand and strong prices could make this a good time for construction companies.

Not much else

Aside from this, there wasn’t much for investors to get excited about. In fact, the stock Buffett spent the most money on was Berkshire Hathaway itself – spending around $1.2bn on share buybacks.

On the other side, the company sold over $5bn of equities, including shares in Chevron, General Motors, and Activision Blizzard. As a result, Berkshire sold far more than it bought. 

I think, this is significant. Berkshire isn’t exactly short of cash, but it still chose to sell some of its stocks between April and June. To me, this indicates two things.

The first is Buffett didn’t see obvious opportunities in the stock market earlier this year. And with nothing obvious to do, the Berkshire CEO demonstrated the patience to sit and wait.

The second is Buffett might well be expecting a better opportunity. Rather than attempting to earn income by investing in dividend stocks, it looks as though Buffett prefers to have cash ready.

It’s also worth noting the Oracle of Omaha not finding anything to buy doesn’t mean there aren’t bargains out there. They might just be too small to make a difference to a company like Berkshire.

Foolish takeaways

The most interesting point is the addition of stocks in the housebuilding sector, I feel. And while it might be tempting to try and copy this with some UK shares, I’m wary of that idea.

The US appears to be in a much better macroeconomic position than the UK. Inflation has been coming down faster and the country hasn’t had an energy shock to deal with.

If this is part of the thesis for buying the builders, then I feel UK investors should be careful. The outlook for Barratt, Persimmon, and Taylor Wimpey might be quite different.

Looking at what Berkshire has been doing with its portfolio is a good way of finding out how Buffett sees the stock market. But I’m on the lookout for other opportunities when it comes to finding stocks to buy.

The post Which shares has Warren Buffett been buying and what does it say about the stock market? appeared first on The Motley Fool UK.

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Stephen Wright has positions in Berkshire Hathaway and General Motors. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.