Warren Buffett Just Bought 4 Stocks. Here's the Best of the Bunch.
One of the world’s greatest investors isn’t doing much investing these days. Warren Buffett was a net seller of stocks for the eighth consecutive quarter in Q3. He again slashed Berkshire Hathaway‘s position in Apple and sold shares of six other holdings.
However, Buffett and his two investment managers (Ted Weschler and Todd Combs) still put some of Berkshire’s massive cash stockpile to work. He recently bought four stocks. One of them stands out as the best of the bunch.
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Berkshire initiated new positions in only two stocks in the last quarter. Its biggest addition was 1.28 million shares of pizza franchiser Domino’s Pizza (NYSE: DPZ). At the end of Q3, Berkshire’s stake in Domino’s was worth $549.4 million.
The conglomerate also dipped its toes in the water with swimming pool supplies distributor Pool Corporation (NASDAQ: POOL). Berkshire bought over 404,000 shares of Pool valued at nearly $152.3 million at the end of Q3.
Besides those two additions, Berkshire increased its positions in only two existing holdings. Its stake in satellite radio operator Sirius XM Holdings (NASDAQ: SIRI) increased by 6.99%. Some of this increase was due to the merger of Sirius XM and Liberty SiriusXM Holdings. Berkshire previously owned shares of the two tracking stocks reflecting Liberty Media’s interest in Sirius XM. However, Buffett or his investment managers also bought more shares of Sirius XM Holdings in October.
Finally, Berkshire boosted its position in Heico (NYSE: HEI) by 0.52% in Q3 after first buying shares in Q2. The conglomerate’s stake in the aerospace and electronics company was worth roughly $214 million at the end of the quarter.
If we only focused on performance this year, Heico would beat the other recent Buffett additions handily. The stock has skyrocketed over 50%. Domino’s comes in second with a year-to-date gain of less than 5%. Pool and Sirius XM are in negative territory with declines of around 10% and 53%, respectively.
The picture looks much different, though, when we look at valuations. Sirius XM Holdings has a bargain-basement forward price-to-earnings ratio of 7.3. Domino’s again grabs the second spot with a forward earnings multiple of 24.3. Pool is somewhat more expensive with its shares trading at 29.8 times forward earnings. Heico is the outlier with a sky-high forward earnings multiple of 63.7.
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