By William Watts
Stake in property-casualty insurer gives Berkshire exposure to 'one of the best-performing financial sector subgroups at a below-peer valuation', CFRA analyst says
Property-casualty insurer Chubb Ltd. was the mystery stock being accumulated by Berkshire Hathaway Inc. in recent quarters, according to a Wednesday regulatory filing by the conglomerate run by billionaire investor Warren Buffett.
Chubb shares rose more than 8% in after-hours trading.
Berkshire Hathaway (BRK.A) (BRK.B) held more than 25.9 million shares of Chubb (CB) as of March 31, a stake worth $6.7 billion, according to a 13-F filing with the Securities and Exchange Commission. Large investors are required to disclose their long stock and some options holdings as of the end of each calendar quarter. Filings are due 45 days after the end of the quarter.
Chubb shares have rallied 12% in the year to date, ending Wednesday's session at $252.97.
Chubb shares are likely to rise Thursday morning "as investors react to this news and speculate whether Berkshire will keep an equity stake in CB or pursue an outright acquisition," said Cathy Seifert, analyst at CFRA, in a note.
Berkshire's equity stake gives it exposure to one of the best-performing financial sector subgroups at a below-peer valuation, she said. "We can't speculate whether Berkshire would pursue an outright acquisition of CB, but we note their business mixes are highly complementary," Seifert wrote.
Berkshire was previously granted permission to keep confidential the details of one or more of its holdings in the third and fourth quarters of last year. Berkshire amended those earlier filings to show it had held shares of Chubb. The stake as of the end of the first quarter accounted for 2% of Berkshire's portfolio.
Buffett wasn't asked about the mystery holding during the question-and-answer session at Berkshire's annual meeting on May 4. Berkshire did reveal at the time that it had cut its holdings of Apple Inc. (AAPL) and had dumped its entire stake in Paramount Global (PARAA) at a loss.
The 13-F filing showed that Berkshire cut its Apple holdings by more than 116 million shares, or nearly 13%. Apple remains Berkshire's largest holding, moving from just over 50% of the conglomerate's portfolio to around 40%. Buffett said on May 4 that Apple would likely still be Berkshire's largest holding at the end of the year.
-William Watts
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05-15-24 2156ET
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