Berkshire Hathaway's New Investments

By Jonathan Stempel

(Reuters) – Warren Buffett's Berkshire Hathaway (NYSE:BRKa) announced new investments in Domino's Pizza (NYSE:DPZ) and Pool Corp (NASDAQ:POOL) in the third quarter, despite scaling back on investments in stocks like Apple (NASDAQ:AAPL) and Bank of America.

As of September 30, Berkshire owned 1.28 million shares of Domino's, valued at approximately $549 million, and 404,000 shares of Pool, worth about $152 million. These investments were revealed in a U.S. Securities and Exchange Commission filing that detailed Berkshire's U.S.-listed holdings as of the same date.

Following the announcement, shares of Domino's rose 6.9% and Pool's shares increased by 5.7% after market hours, showcasing investors' confidence in Buffett's endorsement of these stocks.

The filing did not specify whether Buffett or his portfolio managers, Todd Combs and Ted Weschler, were behind these specific investments. Domino's has been increasing promotions to attract value-focused diners, while Pool has noted steady demand for repair services amid a decline in new pool construction.

Despite these investments, Berkshire continues to build cash reserves, with nearly doubled holdings in cash and equivalents to $325.2 billion as of September 30. The conglomerate also halted stock repurchases for the first time since 2018.

In the third quarter, Berkshire sold $36.1 billion in stocks but only purchased $1.5 billion, significantly reducing its net investments compared to $133.2 billion in sales for the year, mainly from offloading Apple and Bank of America shares. Potential reasons for this pullback may include high valuations or tax considerations.

The cash reserves provide Berkshire with the capability to pursue substantial acquisitions while Buffett, who is 94, remains at the helm. In addition to the new investments, Berkshire increased its holdings in aircraft parts maker Heico and divested completely from flooring retailer Floor & Decor. They also sold portions of shares in Capital One (NYSE:COF), Charter Communications (NASDAQ:CHTR), Brazilian bank Nu Holdings (NYSE:NU), and cosmetics chain Ulta Beauty (NASDAQ:ULTA), the latter seeing a significant drop in its stock price after the news.

Berkshire Hathaway holds a wide array of companies, including Geico car insurance and BNSF railroad, across various sectors including consumer, energy, industrial, and retail businesses.