Warren Buffett Is Scooping Up Shares of This Distressed Beverage Name
A look at some of Warren Buffett's most recent purchases includes a surprise interest in a stock whose value might be ready to turn around.
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Warren Buffett has once again shuffled his portfolio. According to a 13F filing that was released on Friday, Buffett’s Berkshire Hathaway BRK.A holding company was actively buying and selling stocks in the final quarter of 2024.
Speaking of Berkshire Hathaway, that stock continues to roll higher. In addition to trading above its key 50-day (blue) and 200-day (red) moving averages, Berkshire Hathaway has formed an ascending triangle pattern (dotted lines). That pattern suggests the stock could climb to $800,000 per share.
As a value investor, Buffett probably wouldn’t buy Berkshire Hathaway at its current price. Buffett is a bargain hunter, sifting through an overpriced market in search of undervalued stocks. He’s not a momentum trader, so Berkshire's bullish chart means nothing to him.
What is Buffett buying? A diversified beverage company has fallen to a price that Buffett finds reasonable. I’m referring to Constellation Brands STZ, distributor of Modelo beer and Robert Mondavi wines. Constellation Brands recently hit a five-year low.
A technical trader would avoid Constellation Brands, which has lost 37% of its value since the start of last year’s fourth quarter (red arrow). There was a strong clue that this stock was in trouble prior to its steep pullback, in the form of a bearish channel that extends back to April (dotted lines).
Buffett must believe that the stock now trades below its fair value. It’s interesting to note that Constellation’s steepest decline occurred in January, after Berkshire Hathaway’s initial buy. Don’t be surprised if Buffett adds to this recently established position in the current quarter.
Speaking of adding to positions, Berkshire Hathaway continued to buy Domino’s Pizza DPZ in the fourth quarter. Berkshire invested $450 million in Domino’s in Q4, adding to its initial buy in Q3.
Technically, Domino’s is looking tasty, with the stock closing at a six-month high just last week. The stock is currently fighting to break above resistance from November (black dotted line). A bearish gap from last July has been completely filled, and the stock has climbed above its key 50-day (blue) and 200-day (red) moving averages.
Domino’s performed a legendary turnaround starting in 2009, when the company publicly admitted that its product wasn’t very good. Domino’s is scheduled to report earnings on February 24.
Berkshire Hathaway also added to its position in satellite radio provider SiriusXM Holdings SIRI. SiriusXM has been a disaster for investors, losing nearly two-thirds of its value over the past five years.
However, SiriusXM has warmed up lately, gaining nearly 20% since reporting earnings less than three weeks ago. SiriusXM still needs to clear its 200-day moving average (red), which has capped the stock for the past year.
Although Buffett bought these stocks and several others during the fourth quarter, he was a net seller, most notably in the banking sector. Berkshire Hathaway sharply reduced its Bank of America BAC and Citigroup C positions.
Overall in Q4, Buffett sold $14.6 billion worth of stock, while making purchases valued at $3.4 billion. With cashflow from continuing operations added to the mix, Berkshire's cash position increased from $325 billion in the third quarter to a record $345 billion in the fourth quarter.
At the time of publication, Ponsi had no positions in any securities mentioned.
