Tech stocks have come under some pressure as higher interest rates are weighing on the group. Meanwhile, Berkshire Hathaway Inc. (BRK.B) made some of the most drastic changes to its portfolio in years under new CEO Greg Abel according to the latest 13F filings, observes Amber Kanwar, host of the In the Money with Amber Kanwar podcast.
The US 10-year yield hit 4.6% on Tuesday, the highest level in 14 months. The 30-year yield stuck its neck past 5.14%, which is the highest level since 2007.
Now, 5% (give or take a few decimal points) has been the lid for the last 15 years. The level has been tested several times in the last few years, but each time it has come back down. The stock market's ability to shake off its current woes depend on that happening again. With tech companies issuing record levels of debt to fund their AI ambitions, they've become incredibly rate sensitive.
As for Berkshire, it exited 16 stocks including UnitedHealth Group Inc. (UNH), Visa Inc. (V), and Pool Corp. (POOL). The holding company bought just two new stocks: Delta Air Lines Inc. (DAL) and Macy's Inc. (M)...and increased its stake in Alphabet Inc. (GOOGL).
Under Abel, ownership in Alphabet has tripled. In total, Berkshire now holds 26 stocks compared to 42 last quarter. Seems like a "clean-up" quarter with the departure of Todd Combs. Names like UnitedHealth, Pool, and Constellation Brands Inc. (STZ) were all fairly recent adds and uncharacteristically tossed or dramatically reduced from the portfolio in short order.
