For Immediate Release
Chicago, IL – March 5, 2021 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Why Warren Buffett Can’t Quit the Old Economy
Welcome to Episode #227 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks
Value Investor portfolio
, shares some of her top value investing tips and stock picks.
At the beginning of March, Berkshire Hathaway put out its 2020 Annual Letter.
This followed the release of Berkshire’s fourth quarter 13-F filing with the SEC which indicates all of the company stock buys, and sells, in the quarter.
What did we learn about what the world’s greatest value investor was doing with his portfolio?
Selling the Banks and Gold
Berkshire continued to lighten up on its financial holdings, specifically in the banks.
It completely exited its position in several banks, including
JPMorgan Chase
JPM
.
It also sold its one gold miner,
Barrick Gold
GOLD
, after just buying it in the second quarter of 2020. That was a very quick trade.
Two New Big Old Economy Additions
At the same time, Buffett put some of his cash to work by buying new positions in
Verizon
VZ
and
Chevron
CVX
, both old economy stocks.
Verizon is trading with a forward P/E of 10.9. It’s cheap.
It’s a value stock but it has low revenue and earnings growth.
Chevron had sunk again in the fourth quarter of 2020 before the news of the Pfizer vaccine lit a fire under the energy stocks. It was the perfect time to buy it as shares were on sale.
Chevron pays a dividend which is considered to be safe, for now. It’s yielding 5% even after the big run in the stock.
Buffett Has a Long, Winning History in the Old Economy
Chevron isn’t the first energy company Buffett has owned. Berkshire already owns some energy of its own.
Additionally, the portfolio owned Occidental Petroleum as recently as last year.
Berkshire also owns the largest railroad in America in BNSF.
In the annual letter, Buffett described it as being one of the company’s four “crown jewels.”
BNSF was founded in 1850.
It doesn’t get much more “old economy” than a railroad.
But the railroad industry has consolidated into a few big names in the last several decades. These are the winners.
Another railroad,
Kansas City Southern
KSU
, has been such a strong performer, that it was the 6
th
best performing S&P 500 stock in the 30-year period between 1990 and 2020, beating out Apple, which was 14
th
.
What should you know about investing in the Old Economy in 2021?
Listen to this week’s podcast to find out.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit
https://www.zacks.com/performance
for information about the performance numbers displayed in this press release.
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