Buffett Drops The Banks & Buys Barrick Gold
Buffett added to the cash pile in the second quarter when Berkshire Hathaway disclosed that it sold large blocks of stock in Delta Air Lines and Southwest Airlines. He actually sold all his stake in the airlines. We are talking not only Delta Air Line and Southwest Airlines, but also American Airlines and United Airlines.
Buffett was now sitting on $137 billion of cash. Many were calling Buffet washed up. But while many were calling Buffett “finished” he was actually putting that cash to use.
Last month Buffett spent $4 billion to buy the natural gas transmission and storage assets of Dominion Energy. In late July Buffett bought shares in Bank Of America two different times in a span of one week. Berkshire now holds 1.02 billion BofA shares worth more than $25 billion, making it Berkshire’s second-largest equity holding behind Apple.
This past Friday news came out that Buffett made some additional news.
Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) stock moves for the second-quarter are out, revealing a new position in Barrick Gold. According to a 13-F regulatory filing, Berkshire Hathaway snapped up approximately 20.9 million shares of Barrick Gold (GOLD), a position valued at $563.5 million at the end of the quarter.
Berkshire exited its stake in Goldman Sachs (GS), selling the remaining 1.9 million shares, the filing shows. During the quarter, slashed its positions in financials, including Wells Fargo (WFC) and JPMorgan Chase (JPM). Specifically, Berkshire cut its JPMorgan stake by 61%, selling 35.5 million shares to last own 22.2 million shares, a position valued at $2.01 billion at the quarter’s end. Berkshire also cut Wells Fargo by 26%, selling 85.63 million shares to last own 237.58 million shares, a stake worth $6.1 billion at the quarter’s end.
A little over a month ago, the Federal Reserve performed a bank stress tests. Under the Dodd-Frank Act legislation for banks following the Great Recession, banks now go through various economic scenarios each year to determine whether they could maintain adequate capital if a severe recession were to occur. As a result of this year’s test, many banks may have to stop paying a dividend.
In the past, Buffett, didn’t care about gold. Like Bitcoin, Buffett felt gold wasn’t productive like a farm or a company. But, now that gold miners are starting to rake in the dough due to rising gold prices, they are becoming more and more attractive as not only as investment alternative, but a hedge against inflation.
Barrick Gold Corporation explores for and develops mineral properties. The company primarily explores for gold, copper, and silver deposits and according to Oilprice.com, Barrick Gold Corp is one of most promising gold miners in 2020.
Last month, Mark Bristow, CEO of Barrick Gold was on Jim Cramer’s Mad Money. Mark said the mine are at full capacity now after being shutdown during the global lockdown. Mark went on to say gold and copper prices are doing extremely well and so he is happy to be in the mining business.
For 2019, the Barrick reported net earnings per share of $2.26 for the year which was up 46% year on year, while the quarterly dividend was increased by 40% from Q3, to $0.07 cents per share, which was itself a 25% increase from Q2. I'm sure Buffett is happy about his new investment in Barrick.
And the Barrick Gold's stock price looks fantastic as well as the price suggests price is heading to the monthly supply at $35.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
