Berkshire Buys UnitedHealth Shares, Lifts Veil on 3 Mystery Stocks

A portrait of Warren Buffett, CEO of Berkshire Hathaway, during the 2019 annual shareholders meeting in Omaha, Neb. (Johanness Eisele/ AFP via Getty Images)

Berkshire Hathaway bought shares of UnitedHealth Group, home builder Lennar , and Nucor in the second quarter, among other moves. It pared its investments in Apple and Bank of America, according to a 13-F report detailing its U.S.-listed equity holdings on June 30.

Berkshire, led by CEO Warren Buffett, bought just over five million shares of UnitedHealth that were worth about $1.6 billion.

It held about seven million shares of Lennar, 1.5 million shares of D.R. Horton , and 6.6 million shares of Nucor, the country’s largest steel maker, after purchases during the first and second quarters.

Lennar, D.R. Horton, and Nucor were the “mystery” stocks on which Berkshire sought confidential treatment from the SEC at the end of the first quarter. Berkshire didn’t disclose those holdings in its original first-quarter 13-F report in May, but put out an amended report Thursday for the first quarter detailing those investments.

Berkshire sold 20 million shares of Apple for around $4 billion during the second quarter and now owns 280 million shares worth $65 billion. It also sold 26 million shares of Bank of America, continuing to reduce its holding in the big bank. Berkshire now owns 605 million shares of Bank of America worth $28 billion.

UnitedHealth stock is up 8.1% to $293.50 in after-hours trading; Nucor is 7% higher at $154.50; Lennar is 4% higher at $135.45; and D.R. Horton is 2.5% higher at $168.03.

Berkshire also bought more than one million shares of Lamar Advertising in the second quarter. The stock is up 4.8%.

The total buys over the two quarters in the three mystery stocks were less than $2 billion. The D.R. Horton purchase was worth $191 million on June 30; the Lennar stake, $799 million; and the Nucor stake, $856 million.

It’s a mild surprise that Berkshire sought confidentiality for such small investments relative to the total size of its equity portfolio of nearly $300 billion.

In its first-quarter filing, Berkshire said it “has omitted from this public Form 13F one or more holding(s) for which it is requesting confidential treatment.”

Given the smallish size (for Berkshire) of those investments, the three mystery stocks could have been accumulated by Berkshire investment managers Todd Combs and Ted Weschler rather than Buffett, who normally focuses on multibillion-dollar investments that can move the needle at a $1 trillion market cap company. Combs and Weschler together run about 10% of the equity portfolio and often invest independently of each other and Buffett.

Even the UnitedHealth investment of about $1.5 billion, the largest by Berkshire in the second quarter, might have been a Combs or Weschler purchase rather than one made by Buffett.

Berkshire likely paid about $300 a share or more for the UnitedHealth stake in the second quarter, given where the stock traded in the period. Berkshire is probably in the red on that investment.

It is notable that Berkshire sought confidential treatment for the tiny investment in D.R. Horton in the first quarter and proceeded to slightly reduce it in the second quarter.

The company added to its existing investments in Pool, Constellation Brands, and Chevron in the second quarter, while eliminating a position in T-Mobile US, selling 3.8 million shares. It reduced its investment in Charter Communications by almost 50% to about one million shares. It also pared its holding in Liberty Formula One during the period.

Write to Andrew Bary at andrew.bary@barrons.com