In this article, we discuss 6 stocks that Warren Buffett is selling in 2022. If you want to see more stocks that the billionaire sold, click Warren Buffett is Selling These 3 Stocks in 2022.
Warren Buffett, the chief of Berkshire Hathaway, is perhaps the most renowned financier in the investment world, with decades of stock picking experience under his belt. Buffett is one of the richest men in the world, and part of his wealth accumulation strategy is a mix of dividend income and share price gains when building an investment portfolio.
Despite the volatile market backdrop in 2022, the Berkshire Hathaway portfolio increased about $33.5 billion in value in the first fiscal quarter to $363.5 billion. Warren Buffett has advised investors time and again to look out for stocks that they fully understand, which is why he has vocally advocated against cryptocurrency as well. He believes retail investors are flocking to crypto amid the market hype but do not understand the underlying technology, which makes it a risky investment. He recently went on record to say that he would not even spend $25 to buy all the bitcoin in the world.
Warren Buffett picks his stocks systematically, choosing low-levered companies that are highly profitable. His investments are concentrated in the information technology, finance, energy, and consumer staples sectors, with some of the most notable stocks in the Berkshire portfolio including Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Bank of America Corporation (NYSE:BAC). However, in this article, we discuss the stocks that Warren Buffett is selling in 2022.
Our Methodology
We used Warren Buffett’s Q1 2022 portfolio to analyze the stocks he has sold out of entirely, or slashed his position in significantly. We have mentioned the percentage of stake that Berkshire discarded in Q1 for the securities.
Warren Buffett is Selling These Stocks in 2022
6. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
Stake Discarded in Q1 2022: 100%
AbbVie Inc. (NYSE:ABBV) is an Illinois-based pharmaceuticals firm that was established in 2013 as a spin-off of Abbott Laboratories. The company specializes in drugs and therapies for immunology, oncology, neuroscience, and virology. Warren Buffett initiated a position in AbbVie Inc. (NYSE:ABBV) in Q3 2020, during the boom of the COVID-19 pandemic. However, his stake in the company was relatively short lived. He held more than 3 million shares of AbbVie Inc. (NYSE:ABBV) in Q4 2021, worth $410.7 million, which he sold off entirely in Q1 2022.
On April 29, AbbVie Inc. (NYSE:ABBV) reported its financial results for the first fiscal quarter of 2022. The company posted earnings per share of $3.16, beating market estimates by $0.02. The Q1 revenue of $13.54 billion, however, fell short of analysts’ consensus estimates by almost $75 million. The shares plunged 8% after the company reduced its EPS guidance for 2022 and the Q1 revenue came in below Street forecast.
AbbVie Inc. (NYSE:ABBV), on May 16, announced a partnership with Cugene, a clinical-stage biotechnology company developing next-generation precision immunology and oncology drugs to treat autoimmune diseases and cancer. The collaboration will result in an exclusive worldwide license agreement for CUG252, a potential treatment of autoimmune and inflammatory diseases.
Morgan Stanley analyst Terence Flynn on May 2 lowered the price target on AbbVie Inc. (NYSE:ABBV) to $188 from $192 and reiterated an Overweight rating on the shares. While the analyst adjusted his model to include lower Imbruvica estimates, his view on the company’s key growth drivers remains unchanged and he sees recent weakness as a buying opportunity.
Among the hedge funds tracked by Insider Monkey, 82 funds reported owning stakes in AbbVie Inc. (NYSE:ABBV), collectively worth $3.74 billion, compared to 81 funds in the last quarter, with combined stakes exceeding $4 billion. In Q1 2022, Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held a prominent AbbVie Inc. (NYSE:ABBV) position, with 4.65 million shares worth more than $754 million.
Unlike Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Bank of America Corporation (NYSE:BAC), Berkshire Hathaway sold out of AbbVie Inc. (NYSE:ABBV) entirely.
Here is what Miller Howard Investments had to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
5. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 63
Stake Discarded in Q1 2022: 100%
Verizon Communications Inc. (NYSE:VZ) is a New York-based company that specializes in communications, technology, information, and entertainment products and services. The company caters to individual consumers, enterprises, and governments worldwide. DZ Bank analyst Matthias Volkert downgraded Verizon Communications Inc. (NYSE:VZ) on April 29 to Sell from Hold with a $44 price target.
Berkshire Hathaway first invested in Verizon Communications Inc. (NYSE:VZ) in Q1 2014, purchasing over 11 million shares of the company at an average per share price of $47.29. The hedge fund sold its Verizon Communications Inc. (NYSE:VZ) stake in Q3 2016, only to reinvest in the third quarter of 2020. Berkshire slashed its Verizon Communications Inc. (NYSE:VZ) position significantly in Q1 2022, holding only 1.3 million shares as opposed to 158.8 million shares in the earlier quarter.
On April 22, Verizon Communications Inc. (NYSE:VZ)’s Q1 2022 results came in below Street forecasts. The company announced a GAAP EPS of $1.09 and a revenue of $33.55 billion, missing estimates by $0.25 and $59.96 million, respectively.
According to Insider Monkey’s Q4 data, 63 hedge funds were long Verizon Communications Inc. (NYSE:VZ), with collective stakes worth $10.8 billion, compared to 57 funds in the preceding quarter, holding stakes in Verizon Communications Inc. (NYSE:VZ) worth $10.3 billion. Ken Fisher of Fisher Asset Management disclosed a notable stake in the company in Q1 2022, with 16.7 million shares valued at more than $855 million.
Here is what ClearBridge Investments Dividend Strategy has to say about Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 94
Stake Discarded in Q1 2022: 100%
Wells Fargo & Company (NYSE:WFC) is an American diversified financial services company that offers banking, investment, mortgage, and consumer and commercial finance products and services.
Berkshire Hathaway has been a long-term shareholder of Wells Fargo & Company (NYSE:WFC), first investing in the company back in Q4 2010. However, Buffett has systematically dumped his Wells Fargo & Company (NYSE:WFC) stake over the years and aggressively unloaded the stock in 2021, before finally disposing of the entirety of his position in Q1 2022. Warren Buffett has been extremely vocal about the company’s fake account scandal, overcharging foreign exchange customers, and a bunch of other operational problems.
On April 14, Wells Fargo & Company (NYSE:WFC) posted earnings for Q1, reporting an EPS of $0.88, beating estimates by $0.07. The $17.59 billion revenue, however, missed market consensus by $232.38 million. Barclays analyst Jason Goldberg on April 18 raised the price target on Wells Fargo & Company (NYSE:WFC) to $64 from $62 and maintained an Overweight rating on the shares after the Q1 results.
According to Insider Monkey’s Q4 database, 94 hedge funds were long Wells Fargo & Company (NYSE:WFC), with collective stakes valued at $6.11 billion, compared to 88 funds in the earlier quarter, holding stakes in the company worth $6.18 billion. In Q1 2022, Richard S. Pzena’s Pzena Investment Management owned a prominent Wells Fargo & Company (NYSE:WFC) stake, with 17.6 million shares worth $857 million.
Like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Bank of America Corporation (NYSE:BAC), elite investors are flocking towards Wells Fargo & Company (NYSE:WFC).
Here is what Davis Opportunity Fund has to say about Wells Fargo & Company (NYSE:WFC) in its Q4 2021 investor letter:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund include Wells Fargo.”
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Disclosure: None. Warren Buffett is Selling These 6 Stocks in 2022 is originally published on Insider Monkey.
