BuffetDisposes of Sole Vanguard ETF Investment and Shifts Funds into a Boosting Stock That Surged Over 8500% since 1986
Within the span of 45 days following each quarter's end, fund managers managing over $100 million in assets must submit a 13F form to the Securities and Exchange Commission (SEC), detailing their stock holdings at the end of the quarter. These forms are a hot topic among retail investors, who eagerly analyze them to see what heavyweight investors like Warren Buffett are buying and selling, gaining an insight into the thoughts of financial geniuses as they dissect the market. With a $300 billion equities portfolio, Berkshire Hathaway's 13F is among the most anticipated of all.
Buffett Bids Adieu to the Broader Market
Berkshire Hathaway's latest 13F filing revealed that it had sold its entire stake in the SPDR S&P 500 ETF Trust (SPY 0.23%) and the Vanguard S&P 500 ETF (VOO 0.24%). Both ETFs track the S&P 500. This move follows a pattern of caution from Buffett over the course of 2024, with him building a cash reserve and disposing of stocks. The decision to ditch the ETFs further strengthens the notion that Buffett believes the stock market to be overvalued.
After more than two years of bullish market trends and the S&P 500 surpassing 6,100 mark (as of February 16, 20XX), many experts are alarmed by the market's exorbitant valuation. Some investors and strategists express concerns over the disproportionate influence of high-flying tech and AI stocks on the S&P 500. Despite the resilience of the economy, which has outperformed forecasts despite roughly 9% inflation in 2022 leading to the Federal Reserve implementing over 530 basis points of interest rate hikes, Buffett's warning is worthy of heed.
Buffett Strikes Back with a Strategic Investment
Buffett and Berkshire's brand-new position for the fourth quarter was none other than Constellation Brands (STZ 1.80%). Berkshire added over 5.6 million shares of this international alcoholic beverages manufacturer. Some of the brands under Constellation include Modelo Especial, Corona Extra, Pacifico, Kim Crawford, Schrader, and Casa Noble Tequila.
Constellation Brands went public in 1973, but its stock has soared over 8,500% since July 1986. Constellation Brands hasn't exactly been a poster child for high-flying companies recently, though. Its stock has dropped over 33% in the last year and around 20% over the last five years. In its third fiscal quarter of 2025, Constellation reported reduced full-year guidance due to a downturn in demand and de-stocking by U.S. retailers in its wine and spirits business. Additionally, the company may face consequences if former President Donald Trump implements tariffs on Canadian and Mexican imports, leading to a potential shift in consumer preferences towards non-alcoholic beverages, which are showing promising growth.
However, Constellation Brands is not only catering to the non-alcoholic beverage market; it is actively investing in this sector as well. Despite these challenges, the stock is projected to have over 50% potential upside, according to analysts, with RBC Capital analyst Nik Modi lowering his price target to $293 but maintaining an Outperform rating and adding the stock to his Top Ideas list. Buffett and Berkshire's team appear to believe that investors may have exaggerated the stock's potential fall and that the firm's fundamentals make it a worthwhile investment.
- The 13F filings, including Berkshire Hathaway's, are crucial for investors, as they provide insights into the investment choices of major financial players, influencing the overall market outlook and investment decisions of other investors.
- Given the market's overvaluation, as suggested by Berkshire Hathaway's exit from SPY and VOO ETFs, investors should closely monitor their portfolios and consider potential investments that offer value, such as Constellation Brands, which Buffett recently invested in.
- The anticipation for Berkshire Hathaway's 13F filing in 2025 was high, as investors sought to analyze their stock holdings and gain insights into the financial genius' thoughts about the market.
- By 2025, Buffett and Berkshire Hathaway opted to invest in Constellation Brands, a manufacturer of alcoholic beverages and non-alcoholic drinks, demonstrating their belief in the company's potential growth and resilience, despite temporary challenges and concerns related to inflation and potential tariffs.
