Warren Buffett’s Recent Trades – 7 Buys, 10 Sells

Warren Buffett’s latest trades were just revealed via the most recent Berkshire Hathaway Inc. (BRK.B) 13F filing, which is a filing that gives us information on all of the transactions that took place over the fourth quarter of 2021 — the quarter ending December 31 — in the stock portfolio managed by the legendary investor.

This filing can provide some valuable insight into where Warren Buffett thinks the best investments might lie.

Now, it might not make sense to piggyback on his trades and simply buy and/or sell whatever he has because these filings are generally released 45 days after the most recent quarter ended, but it would appear to be an intelligent move to investigate exactly where the most successful investor of all time is (and isn’t) putting his capital to work.

It’s also important to note that Buffett allows two other executives – Todd Combs and Ted Weschler – to authorize smaller transactions, so it’s difficult sometimes to decipher who bought and/or sold what.

Below, I’m going to go over every transaction and give some quick thoughts on each respective company.

I’m going to do my best to infer what each purchase and sale means, but it’s obviously impossible to know exactly what Warren Buffett or his lieutenants were thinking when each transaction was executed.

Let’s take a look!

Purchases

Purchased 14,658,121 shares of  Activision Blizzard, Inc. (ATVI) – NEW POSITION
Purchased 9,541,517 shares of Chevron Corporation (CVX)
Purchased 26,846 shares of Floor & Decor Holdings Inc. (FND)
Purchased 5,347,320 shares of  Liberty Sirius XM Group Series A (LSXMA)
Purchased 2,118,746 shares of  Liberty Media Formula One (FWONK) – NEW POSITION
Purchased 24,580 shares of RH, Inc. (RH)
Purchased 107,118,784 shares of Nu Holdings Ltd (NU) – NEW POSITION

Sales

Sold 11,364,927 shares of AbbVie Inc. (ABBV)
Sold 16,844,262 shares of Bristol-Myers Squibb Co. (BMY)
Sold 371,685 shares of Charter Communications Inc. (CHTR)
Sold 375,000 shares of  Kroger Co. (KR)
Sold 302,000 shares of Mastercard Inc. (MA)
Sold 2,336,844 shares of Marsh & McLennan Companies, Inc. (MMC)
Sold 4,497,634 shares of Royalty Pharma plc (RPRX)
Sold 43,658,800 shares of Sirius XM Holdings Inc. (SIRI) – SOLD OUT
Sold 42,789,295 shares of Teva Pharmaceutical Industries Ltd (TEVA) – SOLD OUT
Sold 1,265,000 shares of Visa Inc. (V)

Purchases

Activision Blizzard, Inc. (ATVI) – Purchased 14,658,121 shares. 

This is a new position for Berkshire Hathaway.

Activision Blizzard, Inc. is an American video game and entertainment holding company.

This is move stands out to me. While the size of the transaction means it was likely Combs or Weschler behind it, this makes it no less interesting or impactful for Berkshire Hathaway shareholders.

I think this investment shows that the culture of Berkshire Hathaway is still very much intact. Buffett has long stressed the importance of ignoring short-term noise and focusing on long-term fundamentals. And when short-term noise causes a stock’s price to drop significantly, even while the long-term fundamentals should hold up and allow the value to eventually reveal itself, that’s an opportunity to strike.

Well, Activision Blizzard’s stock had been hit hard last year from a scandal involving potential CEO misconduct and the overlooking of certain practices within the company. But the business hadn’t really shown any signs of deterioration at all.

Berkshire Hathaway saw this disconnect and pounced.

Now, it can oftentimes take a prolonged period of time for that disconnect to unwind itself. Price can take a while to catch back up to value, especially when the headlines for a business are continuously negative.

However, this one worked out really well and very fast for Berkshire Hathaway, as it was announced in Q1 2022 that Microsoft Corporation (MSFT) is planning to acquire Activision Blizzard for nearly $69 billion. The deal values Activision Blizzard at $95/share, which is well above the levels the stock was at for most of Q4 2021 (frequently below $60/share).

Since Activision Blizzard is still sitting at below $82/share, this is now a merger arb play for Berkshire Hathaway. They may take their gains. Or they may hold on for more. They’ll do that calculus and make the move that they feel is most advantageous.

Chevron Corporation (CVX) – Purchased 9,541,517 shares

This purchase increased Berkshire Hathaway’s position by 33.2%, which is now up to 38,245,036 shares.

Chevron Corporation is an integrated global energy company, with exploration, production, and refining operations across the world.

Berkshire Hathaway’s recent foray into its Chevron ownership has been odd. And based on the size of the moves and the size of the position, we can be pretty confident that Buffett is behind this one.

Berkshire Hathaway initiated their position in Chevron in Q4 2020. They then sold off about half of it only one quarter later – in Q1 2021 – and followed up on that with another small reduction in Q2 2021.

Accumulation mode was then turned back on. Berkshire Hathaway picked up almost 5.6 million shares in Chevron in Q3 2021. And here we are now, with another big add.

For me, I see Chevron now as I’ve always seen it – it’s a solid long-term investment, particularly if you’re after a big yield that’s growing at a decent clip.

The stock yields 4.2%, even after a 47% runup over the last year. That yield blows away the broader market. And that’s still within a reasonable range of its own five-year average.

More importantly, Chevron has increased its dividend for 35 consecutive years. And with a 10-year dividend growth rate of 5.6%, you’re getting appealing dividend growth in almost any environment that doesn’t feature the highly unusual level of inflation that we’re now experiencing.

The crazy thing is, even though it’s gone on a stunning run over the last year, the stock still doesn’t look all that expensive. It’s simply a case where it’s gone from abnormally cheap to historically normal.

I wouldn’t expect Berkshire Hathaway to continue aggressively accumulating Chevron right now, but I’m sure they’re smiling. Their position is up over 14% YTD (while the S&P 500 is flirting with correction territory). And they’re collecting a very large dividend to boot.

Floor & Decor Holdings Inc. (FND) – Purchased 26,846 shares.

Berkshire Hathaway brought their position up to 843,709 shares, which is 3.3% higher than last quarter.

Floor & Decor Holdings Inc. is an American specialty retailer of hard surface flooring and related accessories.

This was a very small move for Berkshire Hathaway, relative to the amount of capital they usually move around. And it’s also a tiny position overall for the company. That indicates that it’s almost certainly Combs or Weschler masterminding the investment.

Berkshire Hathaway initiated their investment in the company in Q3 2021. Adding to it so quickly – just one quarter later – means they must like what they see.

Either way, I find it an interesting way to play the housing market, which has gone absolutely gangbusters over the last two years. That’s in terms of both transactions and improvements. Both are a boon for Floor & Decor Holdings.

But this isn’t a two-year phenomenon. No, Floor & Decor Holdings has done well for a long time.

The company’s revenue is up nearly tenfold over the last decade. EPS is up more than twentyfold over that time frame. Really, really incredible growth.

However, that growth is being noticed and weighed by the market.

The P/E ratio, for instance, is at almost 40. And that’s after a ~20% drop YTD.

While that’s quite high in absolute terms, I suppose it’s not totally unreasonable when you line it up against the very impressive growth rate. Their most recent YOY EPS growth came in at nearly 28%, so the PEG ratio isn’t that far over 1.

Then again, it probably got ahead of itself toward the end of last year, which is what likely led to the poor performance to start off this year.

There’s no dividend here. As a dividend growth investor, it wouldn’t be on my radar. But if you don’t want or need safe, growing dividend income from your investments, this business is worth taking a look at after its recent correction. Getting an even better deal than Berkshire Hathaway on shares in a business is never something to take lightly.

RH, Inc. (RH) – Purchased 24,580 shares

This purchase increased Berkshire Hathaway’s stake by 1.4%, which is now up to 1,816,547 shares.

RH, Inc. is an upscale home furnishings retailer.

In my view, RH is running a fantastic business right now. It flies way under the radar, and it arguably doesn’t get the recognition it deserves. Nonetheless, they’ve been producing otherworldly numbers over the last few years.

For perspective, they were routinely printing an annual GAAP EPS result that ranged between a negative number and less than $1.00 in the earlier part of the last decade. They produced nearly $10.00 in GAAP EPS last fiscal year. That’s a huge turnaround.

Now, the company doesn’t pay a dividend at all, let alone a growing dividend. So it’s not something that would fit into my personal dividend growth stock portfolio. And Buffett’s affinity for safe, growing dividends from his investments is practically legendary at this point. Based on that, as well as the fact that the position is still very small for Berkshire Hathaway, tells us that Buffett likely had nothing to do with this move.

Still, this company does sport some of the usual hallmarks that you see from Berkshire Hathaway’s investments: great brand, pricing power, market leadership, and healthy growth.

On the other hand, the valuation might have gotten ahead of itself during some exuberance for all things housing in 2021. The stock is down 45% from its 2021 peak of $744.56. That’s a material drop. And 2022 hasn’t been kind, either – it’s down 24% YTD.

After that drop, though, the valuation has become more reasonable.

With a P/E ratio of 19.0, that’s more in line with what you’d typically see from a Berkshire Hathaway move. Buffett may not be behind this one, but that’s more or less in his wheelhouse.

The P (price) in the P/E ratio has come down. The only question is whether or not the E (earnings) will continue to hold up its end of the bargain. There’s uncertainty regarding the durability of recent housing trends, suburbanization, and demand for high-end home furnishings.

RH is a great business. And it’s likely going to continue doing well for many, many more years. And the recent drop has made this a more compelling idea than it was for almost all of 2021. The stock spent all of Q4 at pricing levels materially higher than where it’s at now, so following in Berkshire Hathaway’s wake at a more advantageous valuation might not be a bad idea.

Nu Holdings Ltd (NU) – Purchased 107,118,784 shares. 

This is a new position for Berkshire Hathaway.

Nu Holdings is a Brazilian technology company that provides a digital banking platform.

There’s not much I can say about this investment. Based on the relatively small size of the position (under $1 billion), it’s unlikely that Buffett orchestrated it. And Nu Holdings is, well, new. Its IPO came on December 8, 2021. Buffett has a longstanding aversion to getting in on IPOs, so that only adds further evidence that he had nothing to do with this one.

Nu Holdings has little operational history to look at and base any kind of conclusion on. Berkshire Hathaway’s resources are immense, so their ability to research something like this far exceeds my own. But as a regular retail investor, I have to rely on public filings and the information I can find. And there’s just not much there.

Sales

AbbVie Inc. (ABBV) – Sold 11,364,927 shares.

This sale reduced Berkshire Hathaway’s position by 78.9%, which is now down to 3,033,561 shares.

AbbVie Inc. is a global pharmaceutical company with a particular focus on immunology and oncology.

In my Q2 update on Berkshire Hathaway’s moves, which is what began the cascade of sales across the Big Pharma holdings, I said the following:

“There’s a clear trend that played out this quarter. That trend involved Berkshire Hathaway reducing their exposure to Big Pharma almost across the board.”

Well, we saw that trend continue in Q3, with the selling of another 6.1 million AbbVie shares. They’re clearly back at it again in Q4, except they got even more aggressive here by unloading over 11 million shares in AbbVie.

Berkshire Hathaway has been aggressively lowering their exposure to Big Pharma throughout the past three quarters.

When speaking on this trend in the Q2 update, I said this:

“I find this odd and disagreeable. Personally, I’d be more inclined to buy shares in high-quality pharmaceutical companies than to sell those shares. These are great businesses raking in a ton of cash, paying out large and growing dividends, and trading hands for reasonable valuations.”

And then in the Q3 update, I said this:

“I stand by my words. I still think many high-quality pharma stocks, such as AbbVie, make more sense as buys than sells for long-term investors. Now, I have no idea which way these stocks are going to go over the short term. But if you’re in this for the next decade or so, I believe these businesses (and their stocks) will do very well.”

I still stand by those same words.

Look, I don’t have special insight into what Buffett and his team is thinking about these businesses. But from my perspective, I think they’re compelling in terms of quality, growth, yield, and valuation. That goes for AbbVie. It also goes for a number of them across the rest of the space.

In fact, I last highlighted AbbVie as an undervalued dividend growth stock of the Week in late September. That article includes a full analysis and valuation, so be sure to check it out.

I highlighted it even as I knew that Berkshire Hathaway was selling out. AbbVie’s stock is up nearly 34% since I put that article out.

Based on my estimate of intrinsic value, shares are looking a tad rich here. So I wouldn’t be as aggressive here as I would have been in 2021 (when Berkshire Hathaway was selling). But I think one can still opportunistically pick their spots. I believe AbbVie investors will do very, very well over the next 10+ years. And the company should continue to pay and increase its outsized dividend (the stock is yielding 3.9% here).

Bristol-Myers Squibb Co. (BMY) – Sold 16,844,262 shares. 

This sale brought Berkshire Hathaway’s position down to 5,202,674 shares, a 76.4% reduction.

Bristol-Myers Squibb Co. is a pharmaceutical company that manufactures treatments in several areas, including cancer, HIV/AIDS, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis and psychiatric disorders.

This isn’t a surprise. It mirrors the AbbVie sale. As with AbbVie, Berkshire Hathaway reduced their Bristol-Myers Squibb position in Q4 far more aggressively than the reduction that occurred in Q3. This sale of 16.8 million shares follows up Q3’s sale of 4.2 million shares in Bristol-Myers Squibb, so you can see the clear acceleration in selling.

However, everything I just said about AbbVie can be also said about Bristol-Myers Squibb. Again, I see these businesses as highly investable right now. And I think they’re far closer to buys than sells. I’ve felt that way for a while now. And I still feel that way.

Bristol-Myers Squibb is a great business offering a 3.2% yield that is growing like clockwork – the company just increased their dividend by 10.2% in December, marking their 13th consecutive year of dividend increases.

And the valuation is attractive.

I highlighted that attractiveness in a full analysis and valuation article in late December, which appears to coincide with Berkshire Hathaway’s selling activity.

In that article, I estimated fair value for the business at a bit over $68/share. Shares are still trading hands for under $67/each. The margin of safety that was present when the article got published (the stock was under $62 then) is no longer there, but I also don’t see the stock as expensive at all right now.

And with Bristol-Myers Squibb buying back their own stock hand over fist – they’re in the middle of a $5 billion accelerated buyback as we speak – demand for the company’s shares will likely persist for the foreseeable future.

Charter Communications Inc. (CHTR) – Sold 371,685 shares. 

This sale dropped Berkshire Hathaway’s position down to 3,828,941 shares, which is 8.8% lower than the prior quarter.

Charter Communications Inc. is an American telecommunications and mass media company.

Berkshire Hathaway has been invested in this media company for years. Since Q2 2014, actually. With the stock up more than 300% since then, it’s been a great long-term compounder for Buffett and his team.

I’m not real sure why they’ve suddenly soured on the holding. This sale follows up a 19.4% reduction in the position in Q3 2021.

It could simply be profit taking. And the reduction seems to have been prescient – the stock is down 26% from its September 2021 peak. Berkshire Hathaway got out of a significant portion of the position right as that peak was forming, and then they further sold on the subsequent drops.

What I am sure of, though, is that Charter has been knocking it out of the park in terms of their operational results.

The last decade has been transformational. From FY 2012 through FY 2015, the company lost money. After merging with Time Warner Cable in 2016, however, the company has been on fire. Revenue is nearly seven times what it was a decade ago. And they’ve swung from GAAP losses to printing nearly $25 in earnings per share. It’s been a remarkable turnaround.

Berkshire Hathaway rode a large part of this transformation higher. And it seems that they’re okay with taking some chips off the table.

With the valuation still being a bit rich, even after the fall, and since there’s no dividend here, I don’t see a lot of appeal here. This is a mature company that throws off a lot of free cash flow. I’m not quite sure why they’re not paying a dividend.

However, I do think competitor Comcast Corporation (CMCSA) is very intriguing right now. In fact, I highlighted it as an undervalued dividend growth stock of the week less than a month ago.

Kroger Co. (KR) – Sold 375,000 shares.

Berkshire Hathaway dropped their position down to 61,412,910 shares, which is a 0.6% reduction.

Kroger Co. is a retail company that mainly operates supermarkets throughout the United States.

This is such a small sale that I’m not sure any commentary is really warranted here. It was a tiny move that gives no indication of Berkshire Hathaway’s feelings on the position one way or another. In fact, it might not have been a call on the business at all. It could just be a high-level portfolio management call involving capital allocation.

Indeed, Berkshire Hathaway has been pruning some older, Buffett-led positions in the portfolio over the last two or so years, which I attribute to the idea that Buffett is likely slowly handing over the reins to Combs and Weschler. It seems that Combs and Weschler are putting their fingerprints on the portfolio and managing more capital. And with Buffett now 91 years old, it would make sense for him to inch away so that Berkshire Hathaway shareholders and the portfolio are in good hands when Buffett is no longer around.

In terms of Kroger itself, I think it’s a great business. They’ve been consistently plodding along for many years now, which shows up in their track record of 16 consecutive years of dividend increases. And these have not been small dividend increases. The 10-year dividend growth rate is 13.8%, which has been largely fueled by similar EPS growth over the last decade. With a 1.8% yield, you’re getting a good dose of yield to go along with the double-digit growth.

The only thing I’d like to see here is a lower valuation. Most basic valuation metrics are in excess of their respective recent historical averages. That includes the P/CF ratio of 6.1, which is measurably higher than its five-year average of 5.6.

The stock has held up well this year – up about 1% YTD. But if this stock were to dip by 5% or more, it’d get a lot more attractive.

Mastercard Inc. (MA) – Sold 302,000 shares. 

This sale reduced Berkshire Hathaway’s position by 7.0%, which is now down to 3,986,648 shares.

Mastercard Inc. is an American multinational financial services corporation.

This investment dates back to 2011 for Berkshire Hathaway. Buffett is known for his extremely long holding periods. At 11 years and ticking, that’s not a bad start to a multidecade holding period.

However, it’s noteworthy that this sale does follow up a similarly-sized sale in Q3 2021. So that’s two quarters in a row in which Berkshire Hathaway has saw it prudent to sell shares in Mastercard.

This business checks pretty much every box for Buffett. Great fundamentals, wide economic moat, global brand, and even a growing dividend. Regarding that last point, Mastercard has increased its dividend for 11 consecutive years. And I think they’re really just getting started with that. They have the cash flow to support a much larger dividend payout.

However, the one box that might not get checked here is the one regarding valuation.

With a P/E ratio of 42.7, the stock is anything but cheap. On the other hand, that is right in line with its own five-year average. This is a stock that typically gets awarded a high earnings multiple. Rightfully so, one could argue. All the same, though, there’s no apparent discount to be had here. I see this stock as neither a buy nor a sell. Instead, I see it as a solid hold.

Since the stock spent most of Q4 2021 in a similar range in terms of pricing, it could just be that Berkshire Hathaway wanted to trim the position a bit and allocate that capital elsewhere. And, as I noted earlier, there’s been a trend where a lot of old positions have been getting trimmed. In my view, that’s to free up additional capital and control for Combs and Weschler. I see this as less of a call on Mastercard as a business and more of a capital allocation/portfolio management decision for Berkshire Hathaway.

Marsh & McLennan Companies, Inc. (MMC) – Sold 2,336,844 shares. 

This sale reduced Berkshire Hathaway’s position by 85.2%, which is now down to 404,911 shares.

Marsh & McLennan Companies, Inc. is a global professional services firm with businesses in insurance brokerage, risk management, reinsurance services, talent management, investment advisory, and management consulting.

This has been a strange reversal for Berkshire Hathaway. As I’ve noted in prior updates on Berkshire Hathaway’s portfolio, there has been a noticeable uptick in trading activity.

Speaking on this name specifically, Berkshire Hathaway initiated their position in Marsh & McLennan in Q4 2020. I thought it was a great investment that was in many ways perfectly complementary to Berkshire Hathaway.

To my surprise, Berkshire Hathaway almost immediately turned around and started selling the position. They sold off nearly 1.1 million shares in Q2 2021. And I made the following comment about that sudden about-face:

“I see a consulting firm like Marsh & McLennan as perfect for Berkshire Hathaway. You’ve got a very “sticky” client base, attractive margins, and very little capital expenditures to burden operating cash flow. These businesses tend to be free cash flow machines.

That’s why I thought Berkshire Hathaway’s investment in Marsh & McLennan in Q4 2020 made a lot of sense. Berkshire Hathaway then followed that up by picking up another tranche of just over 1 million shares in Q1 of this year.

So it’s a head-scratcher to see them, only one quarter later, sell out of almost 1.1 million shares. It’s an odd and quick about-face that I’ve seen as increasingly common over at Berkshire Hathaway, which I touched on earlier.

I’m not sure how to explain it.”

Berkshire Hathaway then sold another ~1.5 million shares in Q3 2021. I added the following commentary in the corresponding update:

“Perhaps the best way to look at this, and some of their other moves, is not as a long-term investor. That’s difficult for me to do as a long-term investor who is used to covering Berkshire Hathaway as a long-term holder of assets. However, as aforementioned, Berkshire Hathaway’s common stock portfolio has become a lot more active with trading over the last few years.”

Berkshire Hathaway has all but sold out of their position in Marsh & McLennan, so I would expect the remaining shares to be gone by this March.

The stock climbed by nearly 50% in 2021, so it could be that Berkshire Hathaway decided to take the money and run. It’s a sizable gain.

There’s also valuation to consider. After that big run, the undervaluation that existed when Berkshire Hathaway made their initial investment has pretty much disappeared. The business has been performing admirably, but a lot of the stock’s multiples are now elevated. The P/CF ratio of 22.1, for example, is running ahead of its five-year average of 21.6. Not extremely so. But we have to keep in mind that Berkshire Hathaway was looking at different math in Q4 2021, as the stock spent almost the entire quarter priced much higher than where it’s at now.

The business has very good fundamentals. I like the 12 consecutive years of dividend increases. But with a yield of only 1.4%, and a valuation that is fair or worse, any potential buyers ought to be on the lookout for a sizable dip before jumping in.

Royalty Pharma plc (RPRX) – Sold 4,497,634 shares. 

Berkshire Hathaway dropped this position down to 8,648,268 shares, which is 34.2% lower than the prior quarter.

Royalty Pharma plc is the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry.

Speaking of more frequent trading for Berkshire Hathaway, here we go again. This is a perfect example of that.

Berkshire Hathaway just initiated their position in Royalty Pharma in Q3 2021, so they’re already aggressively selling out of it only one quarter later. I do think that the frequent trading is stemming from Combs and/or Weschler, not Buffett. I actually noted that it was almost certainly not Buffett behind this investment in the Q3 update:

“I can say that it’s highly, highly unlikely that Buffett was behind this move. The holding is worth less than $600 million. Buffett has repeatedly stressed that he almost never gets involved when it’s less than $1 billion. He simply manages too much money.”

The other thing I noted in that update is how little there is to say/know about the business:

“The company only went public in June of last year. With such a limited history as a public company, and little financial information to go off of before they went public, I’m not real sure what to make of the business.”

Indeed, I’m not real sure what enticed Berkshire Hathaway to make this investment in the first place. But the very quick reversal would seem to indicate a deterioration in confidence in the business. Seeing as how the stock spent most of Q4 at a lower price than where it was in Q3, there doesn’t appear to be a profit motive behind the sale.

Teva Pharmaceutical Industries Ltd (TEVA) – Sold 42,789,295 shares. 

Berkshire Hathaway completely sold out of this position.

Teva Pharmaceutical Industries Ltd is an Israeli multinational pharmaceutical company.

I’ve actually been critical of this investment right from the start. I saw nothing appealing about the business. And it doesn’t mesh with Berkshire Hathaway at all. Buffett loves to invest in high-quality companies. There’s nothing high quality about Teva, in my view.

The company makes a fraction of the money it was making a decade ago. And the balance sheet is highly levered. In almost every single way, the business has gone in the opposite direction as what you’d want them to go in. And so the stock has followed suit – it’s down 75% over the last five years alone.

This is a name I’ve avoided. With Berkshire Hathaway getting out and Teva losing that kind of backing/support, that does the stock no favors. There’s a lot of businesses to like across Big Pharma, including the aforementioned AbbVie and Bristol-Myers Squibb. One is spoiled for choice. But I’d continue to avoid this business.

Visa Inc. (V) – Sold 1,265,000 shares.

This sale reduced Berkshire Hathaway’s position by 13.2%, which is now down to 8,297,460 shares.

Visa Inc. is an American multinational financial services corporation.

This is two quarters in a row in which Berkshire Hathaway has sold shares in both Mastercard and Visa. I noted the oddness of that in the Q3 update:

“This seems to be a calculated and coordinated move here, with Berkshire Hathaway reducing its positions in both Mastercard and Visa by somewhat similar amounts in the same quarter.”

I think it’s the same story here as it is for the Mastercard position. It doesn’t seem to be a call on Visa as a business. It seems more like a capital allocation/portfolio management story to me.

Now, you can wax poetic about Visa much in the same way as you can about Mastercard. It truly is a world-class business across the board. Fundamentally speaking, it’s nothing short of breathtaking. It’s a highly, highly impressive business.

However, the valuation does leave something to be desired. It’s not that it’s overtly expensive. Instead, just as we saw with Mastercard, there’s no clear undervaluation here. Most basic valuation metrics are in line with, or even ahead, of their respective recent historical averages.

I think Visa is a terrific long-term idea for dividend growth investors. With its 14 consecutive years of dividend increases and ten-year dividend growth rate of 23.1%, this is a compounder for the ages. To wit, the stock is up by nearly 700% over the last decade. And that stock performance is totally justified. It’s supported by the fact that Visa has increased its EPS by more than sevenfold over the last ten years.

I wouldn’t read too much into Berkshire Hathaway’s sale of either Visa or Mastercard. Instead, I’d look to accumulate either, or both, on good-sized dips. Visa is a name that I think gets a lot more interesting when it’s closer to $200/share, which starts to introduce a margin of safety.

— Jason Fieber

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