According to the latest figures, Metaplanet, a company listed on the Japanese stock exchange, witnessed its share price soar by nearly 90% in just one day. This significant jump came on the heels of the company’s announcement regarding its intention to incorporate 1 billion yen in bitcoin into its balance sheet. Metaplanet Joins Forces With […]
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A competitor gave a positive update on end market conditions.
Shares in Johnson Controls (JCI 1.25%), a building products and heating, ventilation, air conditioning, and refrigeration (HVAC) company, rose 10.2% in March, according to data provided by S&P Global Market Intelligence. The move comes after two pieces of newsflow, which could be construed as plusses for the company.
Siemens Smart Infrastructure, part of Siemens AG, is named a large competitor of Johnson Controls in the latter’s Securities and Exchange Commission (SEC) filings. As such, it’s always interesting when its management comments on trading conditions, as it did in March during the Bank of America Industrials Conference.
Siemens CFO Ralf Thomas noted weakness in its automation business. Still, he said that the smart infrastructure business was tracking toward the high end of management’s expectations in the quarter — a good indication for Johnson Controls’ end market prospects.
According to Reuters, the company is working with advisors over a potential sale of some of its residential and light commercial HVAC businesses, with Robert Bosch, Samsung, and Lennox International discussed as possible suitors for assets worth more than $6 billion.
Such a deal would see Johnson Controls refocusing on its core commercial HVAC and fire and security products.
Image source: Getty Images.
Investors would welcome a sale because the main attraction of buying the stock is its exposure to the theme of commercial building owners retrofitting their HVAC and building systems to improve efficiency and meet their net-zero emissions targets. The company’s suite of artificial intelligence (AI)-driven digital applications on its OpenBlue platform can significantly improve building efficiency and save costs.
Given that the residential and light commercial HVAC businesses only contributed 10% of sales in 2023, and are not a core part of the long-term growth drivers discussed, a deal would make sense and enhance the stock’s investment proposition.
Turning to more immediate matters, Johnson Controls is evaluating the impact of a cyber attack on its operations that restricted its growth in the first quarter of 2024. In addition, its global product sales are going through a weak patch as dealers work through inventory built up during the supply chain crisis. For reference, dealers rushed to build inventory as lead times (the time it takes an order to be delivered) were extended, and they wanted to ensure they had products available for customers.
Now that lead times have normalized, dealers are running down inventory, meaning Johnson Controls is temporarily weak. Management believes its sales growth will notably increase in its financial second half — something to look out for when the company releases its second-quarter earnings results.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Embattled crypto lender Genesis Global Capital has continued to ramp up efforts to pay up creditors after filing for bankruptcy protection in January 2023. As part of these efforts, Genesis has now reportedly sold off the entirety of its Grayscale GBTC holdings to acquire a substantial amount of Bitcoin in order to implement its repayment strategy.
According to a Friday report by Bloomberg Law, Genesis finalized the sale of its 36 million GBTC shares, as revealed by the company’s lawyers in a court filing on April 2. Genesis had initially received legal approval to liquidate its GBTC holdings on February 2 with each unit share valued at $38.50. However, court documents showed that the current price of GBTC as at the time of sale on April 2 was $58.50 resulting in a total sale price of $2.1 billion.
Bloomberg’s report disclosed that the bankrupt crypto lender then used these proceeds to purchase 32,041 Bitcoin at a market price of $65,685, which will be distributed to creditors as part of its repayment plan, especially those who were previously enrolled in the Gemini Earn program.
These recent transactions align with Genesis’s bankruptcy plan which allows the conversion of GBTC shares to either Bitcoin or direct cash for the settlement of its existing debt. Currently, the crypto lender owes $3.5 billion to creditors and will commence repayment following court approval.
However, Genesis faces fierce opposition from its parent company, Digital Currency Group (DCG), over its proposed repayment plan. In a petition filed in February, DCG argues that its bankrupt subsidiary looks to settle creditors’ claims at amounts higher than their respective entitlement.
DCG believes such a repayment strategy violates the Bankruptcy Code and is “unfair” since it will only benefit senior creditors who will largely gain from an appreciation in Genesis’s crypto assets value while equity holders and company stakeholders are left in unfavorable positions.
Founded in 2013, Genesis is one of the prominent crypto firms to file for bankruptcy. Its insolvency is largely linked to the sudden collapse of the defunct crypto exchange FTX.
In other news, Bitcoin gained by 2.55% in the last day to reach a price of $69,339. Such price gain would be encouraging to investors especially following the token’s overall negative performance in the past week. On higher timeframes, BTC largely remains largely bullish as anticipation continues to build ahead of the halving event on April 19. The fourth halving in Bitcoin’s history is expected to reduce the mining reward from 6.25 BTC to 3.125 BTC.
BTC trading at $69,314 on the daily chart | Source: BTCUSDT chart on Tradingview.com
Featured Image from Nairametrics, chart from Tradingview.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
The hedge fund manager juggled some of Appaloosa Management’s top holdings.
Billionaire David Tepper made quite a name for himself on Wall Street. He helms Appaloosa Management — the hedge fund he founded back in 1993. He has been called “arguably the greatest hedge fund manager of his generation” and also consistently outperforms his peers.
He correctly predicted the collapse of the housing market and the resulting financial crisis that led to the Great Recession in 2008. He also loaded up on bank stocks at the depths of the downturn, a strategy that eventually turned a significant profit for Appaloosa investors. With a resume like that, it’s no wonder that many investors follow his moves with keen interest.
It raised some eyebrows when Tepper significantly reduced his stakes in Nvidia (NVDA 2.45%) and Alphabet (GOOGL 1.31%) (GOOG 1.32%) in the fourth quarter while opting to increase his stakes in two other members of the “Magnificent Seven.”
Image source: Getty Images.
In the fourth quarter, Tepper made some big changes to the upper echelons of Appaloosa’s portfolio, cutting his stake in Nvidia by 23%. He obviously still sees upside in the stock, as the hedge fund still owns 790,000 shares worth an estimated $678 million). And Nvidia is still Appaloosa’s fourth-largest holding at nearly 7% of the portfolio.
The sale was likely a calculated move on Tepper’s part. After all, Nvidia gained 239% last year and was selling for 65 times earnings and 27 times sales, so its valuation was steep.
Tepper also slashed his stake in Alphabet stock by 16%, though it remains the fund’s seventh-largest holding. Appaloosa now owns 2.3 million shares worth about $388 million.
In this case, though, there’s no obvious catalyst explaining his decision to sell. The stock was still reasonably priced at year’s end, trading for 24 times earnings. He may have had concerns about the timing of the rebound in the digital ad market — which is responsible for the lion’s share of Alphabet’s revenue — or questions about how AI will ultimately impact Google’s near monopoly in search.
In moves that aren’t too surprising, Tepper added to his existing stakes in two of Appaloosa’s top three holdings, as he’s apparently still bullish on their prospects.
Microsoft (MSFT 1.83%) cemented its place as the hedge fund’s No. 2 holding as Tepper increased his stake by 4%. This brought the total count to 1.7 million shares currently worth roughly $710 million, or 11.3% of Appaloosa’s holdings. Microsoft arguably kick-started the AI revolution when it invested in Chat-GPT creator OpenAI and integrated generative AI capabilities across a broad cross-section of its workplace productivity tools.
The biggest opportunity, however, is likely Copilot, its AI-powered digital assistant. Microsoft debuted a number of job-specific versions of Copilot that help automate otherwise time-consuming tasks. The company gained cloud market share, the result of strong demand for its AI tools.
Microsoft stock was selling for a slight premium of 34 times sales at the end of the fourth quarter, but given its quick move into the AI marketplace and the potential for profits, that valuation is more than reasonable.
Amazon (AMZN 2.82%) was the second of Tepper’s Magnificent Seven purchases. He increased his holdings by 5%, bringing Appaloosa’s total stake to 3.95 million shares. At their current value of about $711 million, they account for 11% of the portfolio. As the undisputed cloud infrastructure leader, Amazon has a captive audience for its AI products and services.
The company released a bevy of helpful tools on its e-commerce platform to streamline the processes of selling goods and buying advertising. Furthermore, Amazon has a long history of managing its online retail business in part with AI systems, which help it maintain adequate inventory levels, surface relevant recommendations, schedule more efficient delivery routes, and more.
And with the stock trading at less than 3 times sales at the end of the fourth quarter, Amazon was a steal.
So far, Tepper’s results from these moves have been mixed. Nvidia stock gained 80% so far this year, which has kept it in its position as the undisputed champion among the Magnificent Seven. Alphabet stock is up 11%. Over the same period, Amazon and Microsoft have gained 20% and 12%, respectively. This suggests that Tepper would have been better off had he not made any changes at all to his allocations to these stocks.
There’s a lesson here for investors. If the investing thesis for one of your holdings hasn’t changed — even if the stock sports a nosebleed valuation — it’s sometimes best to stay the course. The AI revolution has just started, and while competition is ramping up, Nvidia’s AI processors are still the best in the business. And Alphabet has a long track record of successfully deploying AI algorithms to further its business objectives, and there’s no evidence to suggest that this time will be any different.
Influential economist John Maynard Keynes reportedly said, “Markets can remain irrational longer than you can remain solvent.” Applied to this case, I take that to mean it’s best not to make investing decisions based on what the broader market is expected to do, but rather to focus on a company’s prospects.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
For nearly six decades, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has been lapping the benchmark S&P 500 in the return column. As of the closing bell on March 28, 2024, the S&P 500 had gained in the neighborhood of 34,400%, including dividends paid, since Buffett took the reins. In comparison, the affably named “Oracle of Omaha” has overseen a jaw-dropping aggregate return in his company’s Class A shares (BRK.A) of 5,126,746% since the mid-1960s!
Both professional and retail investors frequently await Berkshire’s quarterly Form 13F filings with the Securities and Exchange Commission (SEC) to gain an understanding of what stocks Buffett and his top investment aides, Ted Weschler and Todd Combs, have been buying and selling. While Buffett is just as fallible as any other investor, he’s demonstrated a knack for finding value in plain sight.
Something else Warren Buffett is known for is portfolio concentration. Even though the Oracle of Omaha and his team are overseeing a $373 billion portfolio containing 45 stocks and two index funds, the vast majority of Berkshire’s invested assets have been put to work in just a few companies — the “top ideas.”
While 13Fs would give investors the impression that tech titan Apple (NASDAQ: AAPL) is Buffett’s unquestioned favorite stock — Berkshire’s Apple stake accounts for 42% ($155 billion) of invested assets — a deeper dive into how Berkshire Hathaway puts its cash to work points to another even more beloved stock as the Oracle’s cream of the crop.
Let me preface this discussion by noting that Warren Buffett and his team of investors absolutely love Apple as a business. In fact, Buffett himself described Apple as “a better business than any we own” during Berkshire Hathaway’s annual shareholder meeting last year. It’s why an estimated $36 billion has been put to work by Buffett and Co. in shares of Apple since the start of 2016.
There are plenty of reasons for Buffett to feel the way he does about Apple. To start with, it’s one of the most valuable brands globally, and it sports an exceptionally loyal customer base. A brand study conducted by SellCell.com in March 2021 notes that iPhone users are more likely to stick with Apple for their next smartphone purchase than Samsung owners are to buy another Samsung smartphone.
There’s also the domestic dominance of Apple’s iPhone. Since introducing an iPhone that supports 5G speeds in the fourth quarter of 2020, Apple has consistently accounted for a 50% or greater share of the U.S. smartphone market.
However, the company’s future growth boils down to its shift to subscription services. Although Apple has no intention of abandoning the physical products that brought it fame (the iPhone, iPad, Mac, and Apple Watch), focusing on subscription services should provide a lift to its operating margin, enhance the value of its product and service ecosystem, and keep customers loyal to its brand.
But if you asked Warren Buffett to pinpoint the one aspect about Apple he loves most, it wouldn’t be the least bit surprising if he flagged Apple’s market-leading share repurchase program. Since initiating a buyback program in 2013, Apple has bought back about $651 billion worth of its common stock. Not only do buybacks help reduce the number of shares outstanding, which can provide a lift to earnings per share (EPS), they’re a means to increase the ownership stakes of existing shareholders. As time passes, Berkshire is becoming a larger stakeholder in Apple without having to buy a single share.
But the fact remains that the estimated $36 billion Warren Buffett and his team have put to work in Apple over the past eight years takes a back seat to an even more loved stock.
Truth be told, Berkshire Hathaway’s 13Fs fail to tell the full story about the company’s holdings or what the Oracle of Omaha has been doing with Berkshire’s cash. For a more encompassing view, investors will need to dive into Berkshire Hathaway’s quarterly operating results.
Just prior to the executive certifications at the end of Berkshire Hathaway’s quarterly earnings reports is a section on the company’s share repurchase activity. The reason I bring this up is because Warren Buffett has spent considerably more buying back Berkshire Hathaway stock than he and his top aides have spent purchasing shares of any other stock, including Apple.
During the December-ended quarter, Buffett gave the green light for the repurchase of 3,623 shares of Berkshire’s Class A stock and 660,585 shares of Class B stock (BRK.B), which came at a cost of almost $2.15 billion. Since the midpoint of 2018, Buffett and his late right-hand man, Charlie Munger, who he referred to as the “Architect of Berkshire Hathaway” in his latest annual letter to shareholders, OK’d the repurchase of more than $74 billion worth of their own company’s shares. That’s more than twice the amount spent buying shares of Apple.
Prior to July 2018, Berkshire’s share repurchase program only allowed the Oracle of Omaha to buy shares of his company if they traded at or below 120% of book value (no more than 20% of reported book value in the most recent quarter). Since Berkshire stock never fell to or below this threshold, Warren Buffett was forced to sit on his hands and go years without repurchasing a single share.
On July 17, 2018, Berkshire’s board reworked its buyback criteria:
As long as Berkshire Hathaway has at least $30 billion in cash, cash equivalents, and Treasuries on its balance sheet; and
Warren Buffett and the late Charlie Munger agree their stock is intrinsically cheap, buybacks can be made without any end date or ceiling.
Suffice it to say, more than $74 billion in share repurchases over the last 22 quarters makes it plainly obvious that Berkshire Hathaway is Warren Buffett’s favorite stock to buy.
Since Buffett’s company doesn’t pay a dividend, share buybacks are the easiest way he can reward investors who share his long-term vision. These buybacks are slowly but steadily increasing the ownership stakes of Berkshire’s shareholders, as well as increasing EPS. In other words, putting his company’s cash to work via buybacks is making Berkshire Hathaway more attractive to fundamentally focused investors.
With a record $167.6 billion in available cash, cash equivalents, and Treasuries on the balance sheet, as of the end of 2023, Buffett has more than enough firepower to continue buying back shares of his company.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Forget Apple: Warren Buffett Has Spent Twice as Much Buying Shares of This Beloved Stock Since 2018 was originally published by The Motley Fool
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GameStop’s stock ended Monday’s session up 15.4%, registering its largest daily percentage increase since Dec.13, 2023.
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Shares in Puma, Adidas, and JD Sports fell as investors feared headwinds in the apparel sector
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Shares in industrial giant 3M (MMM 1.82%) increased by almost 10% in the week to Friday morning, according to data provided by S&P Global Market Intelligence. The move comes down to a combination of a well-received presentation at the J.P. Morgan Industrials Conference on Wednesday and an update on the CEO succession on Tuesday.
Given that 3M’s share price is down almost 48% since Mike Roman took over as CEO in July 2018 it’s fair to say his tenure hasn’t been a success. However, with former L3Harris Technologies chairman William Brown taking over on May 1, investors have a reason for optimism that a change in strategy could be imminent. That said, Roman will take over as executive chairman at that time, and 3M has waived the mandatory retirement age of 65 years for both men in their 60s.
The headline from the presentation is that Roman raised the company’s first-quarter earnings-per-share guidance from between $2 and $2.15 to a new range of $2.05 to $2.20. However, the $0.05 only comes from “the interest on the Solventum debt raise,” according to Roman. As a reminder, Solventum is the healthcare business 3M is set to spin off on April 1.
On a more positive note, CFO Monish Patolawala told investors 3M’s annualized stranded costs (due to the Solventum spinoff) would be in the $150 million to $175 million range compared to an initial estimate of $350 million to $500 million. That could lead to analysts upgrading their models for ongoing profitability at 3M.
Image source: Getty Images.
3M definitely has attractions as a value play; however, suppose you are considering buying 3M for its 5.9% yield. In that case, it pays to listen to what Roman said in response to a question on the dividend. He once again fell short of definitively affirming it would be maintained at the current level. According to Roman, 3M prioritizes investing in the business before returning capital to investors, including “an attractive dividend.”
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends 3M. The Motley Fool has a disclosure policy.
Shares of fashion brand Fossil Group Inc. jumped 8.5% in after-hours trading Wednesday after Kosta Kartsotis stepped down as chief executive and the company announced a strategic review amid pressure from an activist investor.
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