Exchange-traded fund inflows have already topped monthly records in 2024, and managers think inflows could see an impact from the money market fund boom before year-end.
“With that $6 trillion plus parked in money market funds, I do think that is really the biggest wild card for the remainder of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it be flows into REIT ETFs or just the broader ETF market, that’s going to be a real potential catalyst here to watch.”
Total assets in money market funds set a new high of $6.24 trillion this past week, according to the Investment Company Institute. Assets have hit peak levels this year as investors wait for a Federal Reserve rate cut.
“If that yield comes down, the return on money market funds should come down as well,” said State Street Global Advisors’ Matt Bartolini in the same interview. “So as rates fall, we should expect to see some of that capital that has been on the sidelines in cash when cash was sort of cool again, start to go back into the marketplace.”
Bartolini, the firm’s head of SPDR Americas Research, sees that money moving into stocks, other higher-yielding areas of the fixed income marketplace and parts of the ETF market.
“I think one of the areas that I think is probably going to pick up a little bit more is around gold ETFs,” Bartolini added. “They’ve had about 2.2 billion of inflows the last three months, really strong close last year. So I think the future is still bright for the overall industry.”
Meanwhile, Geraci expects large, megacap ETFs to benefit. He also thinks the transition could be promising for ETF inflow levels as they approach 2021 records of $909 billion.
“Assuming stocks don’t experience a massive pullback, I think investors will continue to allocate here, and ETF inflows can break that record,” he said.
Sandy Pomeroy, Neuberger Berman senior portfolio manager, and Chris Senyek, Wolfe Research chief investment strategist, join ‘Squawk on the Street’ to discuss expectations for rate cuts this year, why investors should be overweight financials, and much more.
Of about 4,000 U.S. banks analyzed by the Klaros Group, 282 banks face stress from commercial real estate exposure and higher interest rates. The majority of those banks are categorized as small banks with less than $10 billion in assets. “Most of these banks aren’t insolvent or even close to insolvent. They’re just stressed,” Brian Graham, Klaros co-founder and partner at Klaros. “That means there’ll be fewer bank failures. But it doesn’t mean that communities and customers don’t get hurt.”
A Polestar Roadster concept electric vehicle during the Singapore Motorshow in Singapore, on Thursday, Jan. 11, 2024. The show runs through Jan. 14. Photographer: Lionel Ng/Bloomberg via Getty Images
Lionel Ng | Bloomberg | Getty Images
Shares of Volvo Cars dipped on Friday, after the company said it would dilute its stake in electric vehicle maker Polestar by distributing 62.7% of its holdings to its shareholders.
The move would “enable Volvo Cars to concentrate its resources on the next phase of its transformation,” the company said in a statement on Friday.
The company’s stock traded over 5% lower at around 10:00 a.m. London time, paring some of its earlier losses.
If approved during the company’s annual general meeting of March 2024, Volvo would retain around 18% of Polestar’s shares.
“As we have significant operational collaborations with Polestar and a financial relationship, it is logical for us to retain influence through a smaller 18.0 percent stake in Polestar,” said Jim Rowan, president and CEO of Volvo Cars.
The announcement comes after the company said earlier this month that it would stop funding ailing brand Polestar and is considering adjusting its holdings in the electrical vehicle maker. Rowan at the time said that the changes were part of a “natural evolution” in the relationship between the automakers.
Polestar was once touted as an up-and-coming electric vehicle company, but has since struggled to find success. Earlier this year, the company said it was planning to cut around 15% of its workforce, as it faced “challenging market conditions.”
Polestar in January said it had missed its delivery target for 2023, citing low levels of demand, persistent inflation and a price-war stoked by rival electrical vehicle maker Tesla as key factors. The company’s challenges have raised questions around its ties to Volvo among analysts.
Volvo Cars on Friday said its majority shareholder, Chinese automotive company Geely Holding, “would continue to provide operational and financial support to Polestar.”
Volvo Cars did not immediately respond to a CNBC request for comment.
People walk through the Financial District by the New York Stock Exchange (NYSE) on the last day of trading for the year on December 29, 2023 in New York City.
A bull market — by two definitions — is here. Last year, the S&P 500 rose more than 20% from its most recent low. As of Friday, it crossed another bull market threshold when it surpassed its previous high.
For investors who want to get in on the action, the good news investing in a fund that tracks the S&P 500 index is an easily accessible strategy.
But experts say it also deserves a word of caution: Past performance is not indicative of future returns. And while the S&P 500 was a clear winner in 2023 — finishing the year up 26% — it may not be the strategy that comes out ahead at the close of 2024.
The S&P 500 includes around 500 large cap equity stocks. The index is a market-cap weighted index, which means each company’s weighting is based on its market capitalization, or the total value of all outstanding shares.
Information technology represents the largest sector, with 28.9% of the index. A recent rally of big tech names has helped push the index to its recent highs.
Vanguard in 1975 created the first index mutual fund that tracked the S&P 500. Vanguard founder John Bogle was famously a proponent of investing in a broad index fund.
“Simply buy a Standard & Poor’s 500 Index fund or a total stock market index fund,” Bogle wrote in his book, “The Little Book of Common Sense Investing.”
“Then, once you have bought your stocks, get out of the casino — and stay out,” he wrote. “Just hold the market portfolio forever.”
For stock investors who want to keep their strategies simple, experts say the approach can work.
“Among the better decisions people can make is starting with an index-based fund tracking the S&P 500 because it works,” Todd Rosenbluth, head of research at VettaFi, recently told CNBC.com.
Over time, passive strategies have shown better returns than actively managed funds. Moreover, the cost of those funds is much lower compared to active strategies. Together, that combination is hard to beat.
“I don’t think individual investors or money managers can generally outperform the S&P 500,” said Ted Jenkin, a certified financial planner and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta. Jenkin is also a member of the CNBC FA Council.
The greater a portfolio’s exposure to the S&P 500 index, the more the ups and downs of that index will affect its balance.
That is why experts generally recommend a 60/40 split between stocks and bonds. That may be extended to 70/30 or even 80/20 if an investor’s time horizon allows for more risk.
Moreover, exclusively investing in the S&P 500 on the stock side of a portfolio may be limiting if other areas of the market prove more successful in 2024.
In 2023, the S&P 500 was up around 26% for the year, besting other strategies like a U.S. small cap index fund or an international stock index fund, noted Brian Spinelli, a certified financial planner and co-chief investment officer at Halbert Hargrove Global Advisors in Long Beach, California, which was No. 8 on CNBC’s FA 100 list in 2023.
It may be tempting to throw out those other strategies and just go with the one that did really well last year, Spinelli noted.
“But I wouldn’t go overboard,” Spinelli said. “You shouldn’t be 100% U.S. large cap and let it sit there and expect the same level of returns we’ve seen over the last five years.”
The U.S. economy continues to grow despite the 5.5% benchmark federal funds interest rate set by the Federal Reserve in 2023.
The Fed’s leaders expect their interest rate decisions to eventually slow that growth.
The increase in borrowing costs that stems from Fed decisions does not affect all consumers immediately. It typically affects people who need to take new loans — first-time homebuyers, for example. Other dynamics, such as the use of contracts in business, can slow the ripple of Fed decisions through an economy.
“It might not all hit at once, but the longer rates stay elevated, the more you’re going to feel those effects,” said Sarah House, managing director and senior economist at Wells Fargo.
“Consumers did have additional savings that we wouldn’t have expected if they had continued to save at the same pre-Covid rate. And so that’s giving some more insulation in terms of their need to borrow,” said House. “That’s an example of why this cycle might be different in terms of when those lags hit, versus compared to prior cycles.”
A 1% interest rate increase can reduce gross domestic product by 5% for 12 years after an unexpected hike, according to a research paper from the Federal Reserve Bank of San Francisco.
“It’s bad in the short term because we worry about unemployment, we worry about recessions,” said Douglas Holtz-Eakin, president of the American Action Forum, referring to the paper’s implications for central bank policymakers. “It’s bad in the long term because that’s where increases in your wages come from; we want to be more productive.”
Some economists say that financial markets may be responding to Federal Reserve policy more quickly, if not instantaneously. “Policy tightening occurs with the announcement of policy tightening, not when the rate change actually happens,” said Federal Reserve Governor Christopher Waller in remarks July 13 at an event in New York.
“We’ve seen this cycle where the stock market moved more quickly in some cases, more slowly in other cases,” said Roger Ferguson, former vice chair of the Federal Reserve. “So, you know, this question of variability comes into play, as in how long it’s going to take. We think it’s a long time, but sometimes it can be faster.”
Watch the video above to see why the Fed’s interest rate hikes take time to affect the economy.
According to NewEdge Wealth’s Ben Emons, the final month of the year typically creates a bigger appetite for the yellow metal.
“It’s been very consistent every December. It’s been a pretty strong performance for gold — especially when there is a rally in the stock market in November,” the firm’s head of fixed income told CNBC’s “Fast Money” on Tuesday.
Gold settled at a new record high Friday. It closed the day up almost 2%, at $2,089.70 an ounce.
Emons listed the economic backdrop and geopolitical backdrop as additional positive catalysts for gold.
“There’s uncertainty next year. We have an election. We don’t know what’s going to happen. We get a recession maybe, maybe not,” said Emons. “At the same time, gold rallies when there’s this risk-on feel in the markets, and that’s really when real rates and interest rates are declining. This gives the gold a really good push for the breakout.”
In a note to clients this week, Emons wrote that months for both gold and stocks are a “rare combo.” Gold gained 3% while the Dow and S&P 500 were both up almost 9% in November.
“[It] tends to occur when markets price in major easing cycles,” he wrote. “Currently, that is going on in a mild manner, which puts the spotlight on the seasonals of gold.”
Emons suggests the strength will continue into next year.
“Central banks are again outbidding gold against dwindling supply, likely setting up the metal for a major breakthrough towards 2100 … lifting boats for laggards like utilities have a shot to claim market leadership by early 2024,” Emons also wrote.
“Fast Money” trader Guy Adami also sees gold shining due to the dollar‘s recent performance.
“If rates continue to go lower, the dollar will go lower. That will be a tailwind for gold,” he said. “Gold is within a whisper of having a huge breakout to the upside.”
As of Friday’s close, gold is up more than 14% so far this year.
Some firms sustain their businesses by taking on more debt that they can repay. Economists call them zombie companies. When compared to their peers, zombies are smaller in size and deliver lower returns to investors. These companies distort markets, keeping resources from their fundamentally sound competitors. Banks and governments keep zombie firms alive with bailout loans. As the Federal Reserve resets the economy with higher interest rates, many zombie firms are filing for bankruptcy.
Suze Orman has a warning for investors relying too heavily on bonds.
The personal finance expert believes the draw of high interest rates and an aversion to risk taking are preventing too many people from taking a “lifetime opportunity” in the stock market.
“Some of these stocks — how do you pass them up? I mean, you have to go into them. Now, do you go into them with everything that you have? No. Do you dollar-cost average into them, and take advantage of [down] days? … Yes,” the “Women & Money” podcast host told CNBC’s “Fast Money” this week. “You’ll be making a big mistake if you park your money forever in bonds.”
“I have some serious losers at this point. However, I don’t care,” said Orman. “I want to buy a stock, and I hope it goes down. And I hope it goes further down and down so I can accumulate more.”
She does recommend keeping some money in fixed income to mitigate risks in a volatile environment.
At the same time, she still sees a role for bonds in portfolios. She likes the three– and six-month Treasurys and is ready to start looking longer term.
“The play may start to be in long-term Treasurys. So, I’ve started to dip my toe in. Every time the 30-year [yield] crosses five percent, I buy,” said Orman.
The 30-year Treasury yield is still near 2007 highs. It traded above 5% as of Friday’s close.
Investor and personal finance author Ric Edelman believes it’s a practical strategy to take chips off the table right now.
“It comes down to behavioral finance. It comes down to human emotion,” the Edelman Financial Engines founder told CNBC’s “ETF Edge” this week. “Do you have the stomach? Does your spouse have the stomach to hang in there if things get ugly like they did in ’01, ’08, 2020? Can you hang in there?”
Edelman added there’s a “laundry list of reasons” to be cynical right now. He includes struggles in the real estate market, high interest rates, government shutdown risks and the Israel-Hamas war.
“It’s easy to be negative and that can cause you to say, ‘Why do I want to put myself in a position of maybe losing another 20% or 30% of my money when I’ve already amassed an awful lot of money and I am already in my ’60s or ’70s and I need the safety and protection and by the way get five percent in my bonds or U.S. Treasury or my bank CD? Why don’t I just park it? Earn 5%. Call it a day,’ he said.
Edelman acknowledges the strategy could be less profitable, but he suggests it’s important to sleep better at night.
“I’m not sure everybody in the investment world is acting logically as opposed to emotionally. You’ve got to know yourself,” said Edelman.
The Capital Group’s Holly Framsted is also seeing investors de-risk, and her firm is trying to cater to them by offering a new batch of exchange-traded funds focused on fixed income.
“We’re seeing increased interest in short-duration fixed income,” said the firm’s head of global product strategy and development.
Framsted speculates the investors are making the move to short-duration funds in response to the volatility of today’s market.
“[The Capital Group Core Bond ETF] was among the original six funds that we launched,” Framsted said. “We’re seeing interest among our client base who tend to be longer-term oriented in nature across the full spectrum. But certainly, a lot of conversations in the short-duration space given the environment that we’re in.”
The firm’s bond ETF is virtually flat since its Sept. 28 launch. The Capital Group managed more than $2.3 trillion as of June 30, according to the firm’s website.
A major financial services CEO warns the economy hasn’t fully absorbed higher interest rates yet.
Thomas Michaud, who runs Stifel company KBW, notes there’s a delayed reaction in the marketplace from the last hike — calling a 25 basis point move at 5% a very different situation than off a half percent.
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“This is getting to be the real deal at the moment because of the level of rates,” he told CNBC’s “Fast Money” on Wednesday. “The bite of these higher rates is gaining traction almost every day.”
Michaud delivered the call hours after the Federal Reserve decided to leave interest rates unchanged. It comes after ten rate hikes in a row.
The Fed signaled on Wednesday two more hikes are ahead this year. Michaud expects one to happen in July. However, he questions whether policymakers will raise rates a second time.
“Trying to deliver a new message with these dots is not what I’m willing to hang my hat on from what I see happening in the economy,” he said. “The economy is slowing. So, I think we’re near the end of this rate increase cycle.”
He lists interest rate sensitive areas of the economy already in a recession: Office space in urban areas, residential mortgage originations and investment banking revenues. He sees the problems contributing to more pain in regional banks.
“Banks were already tightening in the fourth quarter of last year. It didn’t just start in March. Loan growth had been slowing,” added Michaud. “There are elements of like the global financial crisis that are in bank stocks right now.”
According to Michaud, the regional bank rally is a short-term bounce. The SPDR S&P Regional Banking ETF is up almost 18% over the past month.
“The overall industry rally for all participants probably doesn’t happen until we get some more stability in what we think the earnings are going to be,” said Michaud. “Earnings estimates haven’t settled. They haven’t stopped going down.”
He sees a shift from adjusting to the new interest rate environment to credit quality in the second half of this year.
“Before the first quarter we cut bank estimates by 11%. After the quarter, we cut them by 4%.” Michaud said. “My instincts are we are going to cut them again.”
The artificial intelligence trade may be leaving investors vulnerable to significant losses.
Evercore ISI’s Julian Emanuel warns Big Tech concentration in the S&P 500 is at extreme levels.
“The AI revolution is likely quite real, quite significant. But… these things unfold in waves. And, you get a little too much enthusiasm and the stocks sell off,” the firm’s senior managing director told CNBC’s “Fast Money” on Monday.
In a research note out this week, Emanuel listed Microsoft, Apple, Amazon, Nvidia and Alphabet as concerns due to clustering in the names.
“Two-thirds [of the S&P 500 are] driven by those top five names,” he told host Melissa Lee. “The public continues to be disproportionately exposed.”
Emanuel reflected on “odd conversations” he had over the past several days with people viewing Big Tech stocks as hiding places.
“[They] actually look at T-bills and wonder whether they’re safe. [They] look at bank deposits over $250,000 and wonder whether they’re safe and are putting money into the top five large-cap tech names,” said Emanuel. “It’s extraordinary.”
It’s particularly concerning because the bullish activity comes as small caps are getting slammed, according to Emanuel. The Russell 2000, which has exposure to regional bank pressures, is trading closer to the October low.
“You want to stay in the more defensive sectors. Interestingly enough with all of this AI talk, health care and consumer staples have outperformed since April 1,” Emanuel said. “They’re going to continue outperforming.”
The dramatic drop in regional bank stocks is a key entry point for investors, according to analyst Christopher Marinac.
Marinac, who serves as Director of Research at Janney Montgomery Scott, believes the group’s decline over the past week provides an attractive entry point for investors because underlying business fundamentals remain intact.
“We have definitely slipped on a banana peel as it pertains to this deposit worry and scare,” Marinac told CNBC’s “Fast Money” on Monday.
Marinac also named Truist as a top sector pick, saying the company has a competitive advantage among regional banks after selling a portion of its insurance unit. Truist stock has dropped 30% over the past five sessions.
“That’s going to help them pass the stress test in June, so that company certainly is not only a survivor, but a thriver,” he said.
On the longer-term outlook for regionals, Marinac expects the group to pare its losses.
“Eventually, the storm will calm and the seas will part such that banks can go back to trading at book value and higher as we go forward,” Marinac said.
As Wall Street gears up for key inflation data, Wells Fargo Securities’ Michael Schumacher believes one thing is clear: “The Fed is not your friend.”
He warns Federal Reserve chair Jerome Powell will likely hold interest rates higher for longer, and it could leave investors on the wrong side of the trade.
“You think about the history over the last 15 years. Whenever there was weakness, the Fed rides to the rescue. Not this time. The Fed cares about inflation, and that’s just about it,” the firm’s head of macro strategy told CNBC’s “Fast Money” on Monday. “So, the idea of lots of easing — forget it.”
The Labor Department will release its January consumer price index, which reflects prices for good and services, on Tuesday. The producer price index takes the spotlight on Thursday.
“Inflation could come off a fair bit. But we still don’t know exactly what the destination is,” said Schumacher. “[That] makes a big difference to the Fed – if that’s 3%, 3.25%, 2.75%. At this point, that’s up in the air.“
He warns the year’s early momentum cannot coexist with a Fed that’s adamant about battling inflation.
“Higher yields… doesn’t sound good to stocks,” added Schumacher, who thinks market optimism will ultimately fade. So far this year, the tech-heavy Nasdaq is up almost 14% while the broader S&P 500 is up about 8%.
Schumacher also expects risks tied to the China spy balloon fallout and Russia tensions to create extra volatility.
For relative safety and some upside, Schumacher still likes the 2-year Treasury Note. He recommended it during a “Fast Money” interview in Sept. 2022, saying it’s a good place to hide out. The note is now yielding 4.5% — a 15% jump since that interview.
His latest forecast calls for three more quarter point rate hikes this year. So, that should support higher yields. However, Schumacher notes there’s still a chance the Fed chief Powell could shift course.
“A number of folks in the committee lean fairly dovish,” Schumacher said. “If the economy does look a bit weaker, if the jobs picture does darken a fair bit, they may talk to Jay Powell and say ‘Look, we can’t go along with additional rate hikes. We probably need a cut or two fairly soon.’ He may lose that argument.”
The Federal Reserve, over its more than centurylong existence, has emerged as a leading force in the stock market.
This stature was bolstered by the central bank’s adoption of two unconventional policy tools in the 2000s – large-scale asset purchases and forward guidance.
Large-scale asset purchases refer to the Fed’s emergency buying of government debt and mortgage-backed securities. Forward guidance refers to the central bank’s public communications about the future trajectory of monetary policies. The guidance often hints at the expected path of the federal funds interest rate target in advance of a policy change.
Central bankers in 2022 repeatedly told the public to expect tighter economic conditions as it battles inflation. Economists believe this has contributed to months of declining prices across the S&P500.
“I think they know they gambled and lost and that they have to do something serious in order to get inflation back under control” said Jeffrey Campbell, an economics professor at Notre Dame University and former Federal Reserve economist. “I fear that they took a gamble that inflation wasn’t too real at the beginning of 2021.”
The Fed has reacted to hotter-than-expected inflation with seven interest rate hikes in 2022. These higher rates can weigh on publicly traded companies, particularly growth stocks in tech.
Meanwhile, the Fed’s asset portfolio has decreased more than $336 billion since April 2022. Experts tell CNBC that the full combined effects of this economic tightening are unknown.
That has many people on Wall Street waiting for the central bank to pivot, and bring interest rates back down. At the same time, many financial advisors are calling for caution.
“If you have somebody that has a thumb on the scale or has a decided advantage about what’s going to happen, whether we think good things or bad things are going to happen, it’s best not to fight that policy.” said Victoria Greene, founding partner and chief investment officer at G Squared Wealth Management.
Nonetheless, many experts believe that central bank policy is only one piece of the puzzle. Both black swan events and investor sentiment play a massive role in shaping the trajectory of markets, too. “Sure don’t fight the Fed but … don’t believe too much that the Fed is all powerful,” said John Weinberg, policy advisor emeritus in the research department at the Federal Reserve Bank of Richmond.
Watch the video above to learn how the Fed shaped 2022’s stock market.
Benchmark U.S. crude oil for January delivery fell $3.05 to $76.93 a barrel Monday. Brent crude for February delivery fell $2.89 to $82.68 a barrel.
Wholesale gasoline for January delivery fell 8 cents to $2.20 a gallon. January heating oil fell 17 cents to $3 a gallon. January natural gas fell 70 cents to $5.58 per 1,000 cubic feet.
Gold for February delivery fell $28.30 to $1,781.30 an ounce. Silver for March delivery fell 83 cents to $22.42 an ounce and March copper fell 5 cents to $3.80 a pound.
The dollar rose to 136.69 Japanese yen from 134.44 yen. The euro fell to $1.0493 from $1.0534.
Benchmark U.S. crude oil for January delivery rose 96 cents to $77.24 a barrel Monday. Brent crude for January delivery fell 44 cents to $83.19 a barrel.
Wholesale gasoline for December delivery was unchanged at $2.33 a gallon. December heating oil fell 2 cents to $3.22 a gallon. December natural gas fell 31 cents to $6.71 per 1,000 cubic feet.
Gold for February delivery fell $13.50 to $1,755.30 an ounce. Silver for March delivery fell 48 cents $21.13 an ounce and March copper fell 1 cent to $3.62 a pound.
The dollar fell to 138.89 Japanese yen from 139.05 yen. The euro fell to $1.0339 from $1.0412.
Benchmark U.S. crude oil for January delivery fell $1.66 to $76.28 a barrel Friday. Brent crude for January delivery fell $1.71 to $83.63 a barrel.
Wholesale gasoline for December delivery fell 14 cents to $2.33 a gallon. December heating oil fell 12 cents to $3.24 a gallon. December natural gas fell 29 cents to $7.02 per 1,000 cubic feet.
Gold for December delivery rose $8.40 to $1,754 an ounce. Silver for December delivery rose 6 cents $21.43 an ounce and December copper rose 1 cent to $3.63 a pound.
The dollar rose to 139.05 Japanese yen from 138.48 yen. The euro fell to $1.0412 from $1.0413.
OMAHA, Neb. — Warren Buffett’s company slashed its stake in U.S. Bank’s parent company and also sold shares in Chinese electric car maker BYD in the third quarter, according to regulatory filings Monday.
The moves were among several others including a more than $4.1 billion investment in Taiwan Semiconductor that Berkshire Hathaway disclosed in the filings with the SEC and the Hong Kong stock exchange.
The filings detailed all the stock moves made by Buffett’s company in the third quarter.
Many investors follow Berkshire’s moves closely because of Buffett’s remarkably successful track record over the decades.
Berkshire revealed a new 60 million share stake in Taiwan Semiconductor and two smaller new investments in Jefferies Financial Group and Louisiana Pacific Corp.in Monday’s filing.
Berkshire also picked up nearly 4 million more Chevron shares worth more than $700 million to give it 165.4 million shares and continue betting on oil producers. One of Buffett’s biggest investments this year has been buying up roughly $12 billion of Occidental Petroleum shares, including adding nearly 36 million shares in the third quarter.
Buffett’s company trimmed its Activision Blizzard, General Motors and Kroger holdings during the quarter. It also eliminated an investment in Store Capital Corp.
Berkshire said Friday that it now owns 3.5% of Minneapolis-based U.S. Bancorp, down from nearly 10% at the start of the year. The 52.5 million shares Berkshire now holds were worth roughly $2.4 billion Monday.
It also reduced its investment in the Bank of New York Mellon by 10 million shares during the quarter.
But financial stocks remain a core part of Berkshire’s portfolio. The Omaha, Nebraska-based conglomerate’s stake of more than 1 billion shares of Bank of America is one of its biggest investments.
Berkshire’s filings with regulators don’t specify if the decisions were made by Buffett or were the responsibility of the company’s two other portfolio managers, but Buffett generally handles investments over $1 billion. Berkshire officials don’t routinely comment on these stock filings, and they haven’t said why they are selling BYD and U.S. Bancorp stocks.
Berkshire said it now owns a little over 182 million BYD shares, down from 225 million when it started selling off the stock in August. Previously, Buffett hadn’t touched the investment he paid $232 million for in 2008. The stake had soared in value to nearly $7.7 billion by the end of last year.
Buffett’s company now holds 16.6% of the Hong Kong-issued shares of BYD.
Besides its equity investments, Berkshire owns more than 90 companies outright, including Geico insurance, BNSF railroad, several major utilities and an assortment of well-known brands such as Duracell, Dairy Queen and Fruit of the Loom.
Twitter’s new owner and Tesla CEO Elon Musk sold nearly $4 billion worth of Tesla shares, according to regulatory filings.
Musk, who bought Twitter for $44 billion, sold 19.5 million shares of the electric car company from Nov. 4 to Nov. 8, according to Tuesday’s filings with the Securities and Exchange Commission.
He sold $7 billion of his Tesla stock in August as he worked to finance the Twitter purchase he was trying to get out of at the time. In all, Musk has sold more than $19 billion worth of Tesla stock since April, including those in Tuesday’s filings, likely to fund his share of the Twitter purchase.
The takeover of Twitter has not been smooth and the social media platform has seen the exodus of some big advertisers in recent weeks in including United Airlines, General Motors, REI, General Mills and Audi.
Musk acknowledged “a massive drop in revenue” at Twitter, which heavily relies on advertising to make money.
Musk had signaled that he was done selling Tesla shares and the revelation that those sales continue left some industry analysts exasperated.
“Our fear heading into the final days of the deal was that Musk was going to be forced to sell more Tesla stock to fund the disaster Twitter deal and ultimately those fears came true which speaks to some of the massive selling pressures on the stock of late,” wrote Daniel Ives at Wedbush. “For Musk who multiple times over the past year has said he is ‘done selling Tesla stock’ yet again loses more credibility with investors and his loyalists in a boy who cried wolf moment.”
Most of Musk’s wealth is tied up in shares of Tesla Inc. On Tuesday, his personal net worth dropped below $200 billion, according to Forbes, but he is still the world’s richest person.
Musk had lined up banks including Morgan Stanley to help finance the Twitter deal. His original share of the deal was about $15.5 billion, Ives estimated . But if equity investors dropped out, Musk would be on the hook to replace them or throw in more of his own money.
“The Twitter circus show has been an absolute debacle from all angles since Musk bought the platform for all the world to see: from the 50% layoffs and then bringing back some workers, to the head scratching verification roll-out to users which many are pushing back on, to the constant tweeting in this political firestorm backdrop, and now…..selling more TSLA stock,” Ives wrote. “When does it end?”
Shares of Tesla Inc., which were flat before the opening bell Wednesday, have fallen 8% this week and are down 46% this year, far outpacing broader market declines in what has been a dreadful year for investors.
