Berkshire Hathaway (NYSE:BRKa), led by renowned investor Warren Buffett, has made significant changes to its stock portfolio, as revealed in its third-quarter earnings report. The conglomerate has sold off more assets than it acquired, indicating a cautious approach amidst current market conditions. Notably, it has completely exited its long-standing investment in Procter & Gamble (NYSE: NYSE:PG), ending a relationship that spanned over twenty years.
The company also divested its entire stake in Johnson & Johnson (NYSE: NYSE:JNJ), a move that could be attributed to the healthcare giant's ongoing legal issues related to its baby powder products. This decision reflects Buffett's preference for safer investments, as the firm has shown a leaning towards short-term treasuries, which are currently yielding over 5.5%.
In a surprising turn, Berkshire Hathaway acquired shares of Sirius XM Holdings (NASDAQ: NASDAQ:SIRI), a satellite radio company known for its substantial debt load. The investment may be driven by Sirius XM's strong free cash flow prospects and its niche position in the market. Additionally, there could be potential arbitrage opportunities in light of Liberty Media's planned merger with its stake in Sirius XM.
The strategic exits from Procter & Gamble and Johnson & Johnson, along with the sale of shares in United Parcel Service (NYSE: NYSE:UPS), suggest that Berkshire Hathaway is repositioning away from smaller positions in companies that may not fare well in a post-pandemic economic downturn.
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