Warren Buffett Shakes Up the Stock Market with a $6.7 Billion Move

Warren Buffett is one of the wealthiest people in the world. The world’s stock market observers are focused on his investment moves. The American stock market often reacts strongly to the investments made by Buffett’s Berkshire Hathaway.

On May 15th, Berkshire Hathaway submitted a 13F amendment to the U.S. Securities and Exchange Commission (SEC). The 13F is a document that institutional investment managers submit quarterly to the SEC. Berkshire Hathaway bought shares in Chubb, a global casualty insurance company, this quarter. Berkshire Hathaway purchased about 26 million shares of Chubb for a total of $6.7 billion. This is a significant amount, ranking 9th among the company’s holdings as of the end of last March. After this fact was revealed, Chubb’s stock price rose.

New York Stock Exchange

Berkshire Hathaway, led by Warren Buffett, kept this stock a secret for six months and quietly started buying from the third quarter of last year. They avoided mentioning the mystery stock even at the recent Berkshire annual shareholders meeting. CNBC analyzed Berkshire Hathaway’s quarterly data and found that the amount of bank, insurance, and financial stocks changed. It increased by $3.59 billion in the second half of last year and then by $1.4 billion in the first quarter.

CNBC added, “It appears likely that Berkshire Hathaway has been buying a significant amount of bank stocks and keeping it confidential.” This secrecy is necessary because disclosing such purchases often leads to a surge in the stock price.

Chubb

When Berkshire Hathaway buys a stake in a specific company, investors who believe that Buffett’s approval was behind it continue to buy to adopt a similar strategy. The SEC also recognizes Berkshire Hathaway’s special effect and allows it to proceed with the purchase secretly for a while. Therefore, many investors focus on the disclosures announced by Berkshire every quarter. Companies like ExxonMobil, IBM, Chevron, and Verizon also used this strategy to keep their share purchases confidential at the time of acquisition.

With this disclosure, Berkshire’s mystery stock was revealed to be Chubb, and Chubb’s stock price surged in after-hours trading. On the New York Stock Exchange (NYSE), Chubb’s stock price jumped from $252.97 to $270, an increase of 6.7%, by 6 PM Eastern Time.

Reuters cited CFRA Research analyst Cathy Seifert, who said, “Chubb’s appeal as a Berkshire Hathaway investment lies in its close association with Berkshire’s core insurance business.” She added, “As a property and casualty insurance operator, Chubb’s operations in commercial specialty insurance and luxury goods insurance align well with Berkshire Hathaway’s portfolio.”

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Chubb, headquartered in Zurich, Switzerland, is considered the largest casualty insurer in the U.S. market. It was also the insurer for the Francis Scott Key Bridge in Baltimore, a major disaster that hit the U.S. in March.

Berkshire Hathaway made a big move in this amendment. According to the company’s stock portfolio, it drastically reduced the proportion of Apple Inc. from 50% to 40%. Most of the stocks Berkshire sold in the first quarter were Apple Inc. stocks. The total price of the stocks Berkshire sold in the first quarter was $20 billion. It was also revealed that it sold 2.5% of Chevron’s shares, which it had held for a long time. Investors are also expected to be shaken by Berkshire’s sale. Meanwhile, Berkshire Hathaway was also found to have the largest cash ever this year because it could not find an investment destination.

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Warren Buffett has dramatically influenced the U.S.; his investment philosophy and business methods are respected and studied worldwide. Buffett’s core investment methods are value investing, long-term investing, portfolio diversification, and careful company selection and analysis.

First, value investing means investing according to a company’s value after accurately evaluating it. Buffett believes it is essential to buy a good company cheaply and is known to invest, focusing on its long-term value. He also advocates for long-term investment. He holds stocks for an extended period based on trust and belief in the company, which has the advantage of not being affected by short-term volatility.

Buffett pursues portfolio diversification to maintain this stable investment, which minimizes risk by diversifying into various industries and companies. Lastly, Buffett is famous for carefully selecting stock investments. Many investors follow his thorough analysis and careful decisions.