Warren Buffett, Berkshire Hathaway sell banks to buy booze

Warren Buffett kicked off May with a bombshell.

After 60 years at the helm, Warren Buffett will be stepping down as CEO of Berkshire Hathaway at the end of the year. 

The 94-year-old investing legend will cede the role to 62-year-old Greg Abel, a Berkshire veteran who has been with the company since 1999.

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Since he took over in 1965, Buffett has guided Berkshire Hathaway from being a textile manufacturer to an investment company. Today, the sprawling conglomerate has 400,000 employees.

While the Oracle of Omaha’s longevity is revered in most circles, his returns as an investor are even more impressive. 

Berkshire Hathaway’s average annual return was about 19.8% from 1965 to 2023, nearly doubling the S&P 500’s 10.1% annual average during the same period. 

In 2024, Berkshire improved on that impressive performance with a 25.5% total return, slightly outperforming the S&P 500’s 25% return.

So when Warren Buffett and Berkshire Hathaway make a move, people pay attention.

Recently, Berkshire Hathaway has been piling into short-term U.S. Treasury bills. 

Berkshire currently holds a $314 billion stake that represents 5% of all outstanding short-term government bills, according to a recent note from JP Morgan, taking advantage of interest rates that have dipped recently but remain in record-high territory. 

Buffett has purchased T-bills in tranches as large as $10 billion, according to the report. The government sells those bills in terms ranging between four and 52 weeks.

But if you’re in the mood for returns greater than 4%, Berkshire Hathaway’s recent 13-F filing gives insights into its more lucrative investment decisions. 

Berkshire trades banks for booze

If one can glean a trend from Berkshire Hathaway’s latest 13-F filing with the Securities and Exchange Commission, it’s that the firm is bearish on the banking sector and bullish on alcohol.

Buffett increased his stake in Constellation Brands STZ — the brewer behind Corona, Modelo, Robert Mondavi, and other alcohol brands — to more than 12 million shares, more than double the 5.6 million initial shares it bought at the end of the year. 

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Berkshire now holds a 6.6% stake in the company. Constellation shares were up 1.7% at the last check-in on Friday afternoon trading. 

To pay for the purchase, Berkshire slashed its exposure to the banking sector.

The company exited its three-year-old stake in Citigroup, selling the more than 14.6 million shares it held during the first three months of the year. 

It also cut its long-term holding Bank of America by 48.6 million shares and trimmed its Capital One holding by just 300,000 shares. 

Warren Buffett decides to step down 

On May 3, the 94-year-old Warren Buffett announced that he will be stepping down as CEO of Berkshire Hathaway. 

“I don’t have any trouble making decisions about something that I was making decisions on 20 years ago or 40 years ago or 60 years,” Buffett recently said in an interview. “I will be useful here if there’s a panic in the market because I don’t get fearful when things go down in price or everybody else gets scared.”

Still, Buffett does acknowledge that, frankly, he’s gotten old.

“I didn’t really start getting old, for some strange reason, until I was about 90,” he said in the interview. “But when you start getting old, it does become — it’s irreversible.”

He says he’s started occasionally losing his balance, having trouble with recall, and experiencing deteriorating vision.

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