Podcasts > Money Rehab with Nicole Lapin > What Warren Buffett Is Buying, Selling… and Whether You Should, Too

What Warren Buffett Is Buying, Selling… and Whether You Should, Too

By Money News Network

In this episode of Money Rehab, Nicole Lapin examines Warren Buffett's recent investment decisions through his company Berkshire Hathaway. She breaks down his notable portfolio changes, including significant reductions in Bank of America and Apple holdings, while highlighting his new positions in companies like Domino's Pizza and Sirius XM.

The episode explores Buffett's investment philosophy, which focuses on buying great companies at fair prices for the long term. Lapin explains why Buffett makes specific investment choices and discusses what individual investors can learn from his moves—while noting that his investment opportunities often differ from those available to the average investor due to his scale of operations.

What Warren Buffett Is Buying, Selling… and Whether You Should, Too

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What Warren Buffett Is Buying, Selling… and Whether You Should, Too

1-Page Summary

Warren Buffett's Investment Exits

Warren Buffett has made significant changes to his investment portfolio through Berkshire Hathaway. He's reduced his stake in Bank of America by nearly 40% over three quarters, citing concerns about the bank's interest rate sensitivity and current premium valuation. In the technology sector, Buffett has sold two-thirds of Berkshire's Apple holdings, though still maintaining 300 million shares. This decision was influenced by Apple's stagnating product sales and high forward price-to-earnings ratio of 33.

Warren Buffett's Investment Additions

While making notable exits, Buffett has also been building new positions. He's accumulated over 2.6 million shares in Domino's Pizza, attracted by the company's global brand strength, technological investments, and consistent international growth. Additionally, Buffett has increased Berkshire's stake in Sirius XM, now holding about 35% of the company. Lapin notes that Sirius XM's appeal lies in its near-monopoly position in satellite radio and its subscription-based model that provides stable cash flow.

Warren Buffett's Investment Philosophy and Principles

Buffett's investment strategy centers on buying great companies at fair prices for the long term. According to Lapin, he prioritizes businesses with strong cash flows, pricing power, and economic moats while avoiding speculative "meme stocks" and market hype. His philosophy also includes selling stocks when their valuations exceed their intrinsic values, regardless of past success.

Lessons for Individual Investors From Warren Buffett's Moves

While Buffett's moves are closely watched, Lapin cautions against blindly copying his strategy. She explains that Buffett operates at a scale that provides unique investment opportunities unavailable to individual investors. Instead, she advises focusing on durable businesses with strong cash flow and pricing power, while being mindful of valuation and tax implications when making investment decisions.

1-Page Summary

Additional Materials

Counterarguments

  • While Buffett's strategy emphasizes long-term value, some critics argue that a more diversified approach that includes growth stocks, even with higher valuations, could potentially yield better returns in certain market conditions.
  • The decision to sell Apple shares due to stagnating product sales and a high P/E ratio could be premature if Apple's innovation pipeline or service sector growth compensates for these concerns.
  • Investing in Domino's Pizza based on its global brand and technological investments might overlook potential risks such as market saturation or shifts in consumer preferences towards healthier options.
  • The increased stake in Sirius XM assumes continued dominance in satellite radio, but this could be challenged by the rise of streaming services and changing consumer habits in media consumption.
  • Buffett's avoidance of "meme stocks" and market hype may result in missed opportunities for significant short-term gains that some active traders pursue.
  • The advice against blindly following Buffett's moves is sound, but it could be argued that individual investors can still benefit from studying his investment principles, even if they cannot replicate his scale.
  • The focus on companies with strong cash flow and pricing power may not always account for the potential of emerging industries or companies that are currently undervalued due to temporary setbacks.
  • The emphasis on avoiding overvalued stocks might lead to missing out on companies that are able to grow into and justify their valuations over time.

Actionables

  • You can analyze the financial health of companies you're interested in by using free online tools like Yahoo Finance or Google Finance to check their cash flow, debt levels, and profit margins. By doing this, you'll be able to identify businesses that have strong financials similar to the ones favored by successful investors, which could be more resilient in economic downturns.
  • Create a simple spreadsheet to track the price-to-earnings (P/E) ratio of stocks you own or are considering buying. Update this monthly to see how the valuation changes over time. If the P/E ratio gets too high compared to historical averages or industry peers, it might be a signal to reassess the investment, as paying too much for a stock can limit future returns.
  • Set up a virtual stock portfolio using an app or online platform that allows for paper trading, where you can practice buying and selling stocks without using real money. This will enable you to test investment strategies based on company fundamentals and long-term value, rather than market hype, and learn from the outcomes without financial risk.

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What Warren Buffett Is Buying, Selling… and Whether You Should, Too

Warren Buffett's Investment Exits

Warren Buffett, through his investment firm Berkshire Hathaway, has made several significant changes to his portfolio, exiting positions that have shaped the investment landscape for years.

Buffett Sells Berkshire's Bank of America Stock

Buffett Locks in Gains due to Bank of America's Rate-Sensitive Earnings and Overvaluation

Buffett has been letting go of Bank of America stock progressively over three consecutive quarters, selling nearly 40% of Berkshire Hathaway's stake in the banking giant. The decision to shed Bank of America shares comes at a time when the bank's earnings are particularly sensitive to interest rate fluctuations. With potential rate cuts on the horizon, there are concerns that Bank of America's future earnings may falter. Buffett's initial investment strategy capitalized on the bank's undervaluation; he bought in when it was trading at a significant discount—62% below its book value. However, with the stock now trading at a premium, Buffett has opted to lock in gains from the appreciation.

Buffett Sold Two-thirds of Berkshire's Apple Stake

Apple's Sales Stagnation Less Appealing to Buffett

Moving on to technology, Buffett has greatly reduced his position in Apple, divesting two-thirds of his holdings. Despite this substantial sale, he maintains ownership of 300 million shares. Buffett's decision to scale back on Apple stock appears to stem from a plateau in the company's product ...

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Warren Buffett's Investment Exits

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Counterarguments

  • The decision to sell Bank of America stock might be premature if the bank manages to navigate interest rate fluctuations successfully and continues to grow its earnings.
  • Selling Bank of America shares when they are at a premium could mean missing out on future gains if the stock continues to appreciate.
  • Buffett's sale of Apple shares might not fully account for the company's potential to innovate and create new revenue streams, which could drive future growth.
  • The valuation concerns regarding Apple's forward price-to-earnings ratio may not consider the company's strong brand loyalty and its ecosystem's ability to generate consistent revenue.
  • Reducing exposure to Apple based on stagnant product sales might overlook the company's services sector growth, which could compensate for any slowdown in hardware sales.
  • The strategy to sell shares to avoid potential future hig ...

Actionables

  • You can analyze your own investment portfolio for interest rate sensitivity by reviewing the financial statements of companies you've invested in, focusing on how their earnings are affected by changes in interest rates. For instance, if you own bank stocks, look at the net interest margin (NIM) to gauge how much profit they make from borrowing and lending activities, which are directly impacted by interest rate changes.
  • Consider setting personal investment exit criteria based on valuation and tax considerations by determining at what stock price or valuation level you would sell a portion of your holdings. This could involve setting target prices for when you believe a stock is overvalued or establishing a timeline for selling to potentially take advantage of current tax rates before any anticipated c ...

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What Warren Buffett Is Buying, Selling… and Whether You Should, Too

Warren Buffett's Investment Additions

Warren Buffett, known for his long-term value investing approach, has made notable additions to his investment portfolio, specifically building positions in Domino's Pizza and increasing stakes in Sirius XM.

Buffett Building Position in Domino's Pizza

Buffett has been consistently investing in Domino's Pizza, now holding over 2.6 million shares after three quarters of investment activity as of Q1 of 2025.

Domino's: Global Brand, Strong Economics, Strategic Tech, Consistent Growth

Domino's stands out for its robust global brand, making it an attractive investment. The company is acknowledged for its smart tech investments, strong unit economics, operational efficiency, and consistent performance. Impressively, international locations have posted same-store sales growth for 31 consecutive years.

Buffett Likely Bets on Domino's Market Share Gains and Growth Strategy

Warren Buffett's interest in Domino's suggests a belief that the pizza giant will continue to gain market share. The five-year growth strategy, aptly named "Hungry for More," aims to maintain this momentum. Lapin humorously extended an invitation to Buffett to join her at Domino's, signaling his interest in the company.

Buffett Increased Berkshire's Stake in Sirius Xm

Buffett's investment strategy also includes Sirius XM, a leading figure in satellite radio.

Sirius Xm: Satellite Radio Near-Monopoly With Stable Subscription Cash Flow

Sirius XM operates with a stable subscription-based m ...

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Warren Buffett's Investment Additions

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Clarifications

  • Sirius XM operates on a subscription-based model, providing radio services for a fee. As a dominant player in satellite radio, it enjoys a near-monopoly in this market segment. The company's fixed costs remain stable, and as its subscriber base grows, it experiences expanding profit margins.
  • Berkshire Hathaway's stake in Sirius XM is significant as it reflects Warren Buffett's confidence in the company's financial prospects. With Berkshire holding over 35% of Sirius XM shares, it indicates a substantial investment in a business with stable subscription cash flow and expanding profit margins. Buffett's increased stake over the last six months signals a long-term commitment to Sirius XM's growth potential. This investment aligns with Buffett's strategy of backing companies with strong market positions and consistent performance.
  • Warren Buffett is renowned for his long-term value investing approach, focusing on companies with strong fundamentals and competitive advant ...

Counterarguments

  • While Buffett's investment in Domino's Pizza reflects confidence in its business model, it's important to consider the competitive landscape of the fast-food industry, which is subject to rapid changes in consumer tastes and increasing competition from delivery services and other fast-food chains.
  • The consistent growth in international same-store sales for Domino's is impressive, but it may not necessarily predict future performance, especially in the face of economic downturns or market saturation.
  • Buffett's strategy of investing in companies with a strong market share like Domino's may overlook emerging competitors or disruptors in the food industry that could erode Domino's market position over time.
  • The invitation from Lapin to Buffett to join her at Domino's could be interpreted as a publicity stunt rather than a genuine indicator of Buffett's investment interests or strategies.
  • Sirius XM's near-monopoly in satellite radio and stable subscription cash flow are positives, but the rise of streaming services and changing consumer preferences towards personalized and on-dem ...

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What Warren Buffett Is Buying, Selling… and Whether You Should, Too

Warren Buffett's Investment Philosophy and Principles

Warren Buffett, known for his sagacious investment strategies and remarkable track record, holds a philosophy that revolves around long-term value rather than short-term speculation.

Buffett Buys Great Companies At Fair Prices For the Long Term

Buffett's strategy is underpinned by his commitment to purchasing substantial businesses at reasonable prices and maintaining ownership for extended periods. He prioritizes undervalued companies capable of generating substantial cash flow and possessing economic moats. These companies often have dominant brands, loyal customer bases, and significant pricing power.

Specific examples reflecting Buffett’s long-term investment horizon include his stakes in successful enterprises like Domino's and Sirius XM. These selections highlight Buffett’s affinity for consistent growth and durability in his investments. Lapin underscores Buffett's preference for self-sustaining businesses that are able to benefit shareholders through dividends or share buybacks.

Buffett Avoids Hype, Noise, and Confusion

Consistent with his methodical approach, Buffett steers clear of the buzz that surrounds speculative stocks often termed as "meme stocks." His investment method is rooted in a deep understanding of business operations, and he avoids engaging in transactions that do not align with his insights. Simply put, day trading and hype-driven market behavior do not find space in Buffett’s investment playbook.

Buffett Favors Businesses With Strong Cash Flow, Pricing Power, and Advantages

Buffett's selections are highly influenced by the underlying financial health of the businesses, spe ...

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Warren Buffett's Investment Philosophy and Principles

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Counterarguments

  • While Buffett's strategy of buying great companies at fair prices for the long term has been successful, it may not be suitable for all investors, especially those who require liquidity or have a shorter investment horizon.
  • Prioritizing undervalued companies with economic moats can lead to missed opportunities in emerging markets or innovative sectors that do not yet exhibit these characteristics but have significant growth potential.
  • Avoiding market hype and noise is generally prudent, but it can also mean missing out on early gains from trends or sectors before they become established and recognized by more traditional investors.
  • Focusing on businesses with strong cash flow and pricing power might result in a concentrated portfolio that lacks diversification, potentially increasing risk if those sectors face downturns.
  • Closely considering valuation is important, but relying ...

Actionables

  • You can start a virtual investment club with friends to practice identifying undervalued companies. Gather a group of friends interested in investing and meet regularly online to discuss potential investments. Each member could research and present a company that they believe is undervalued, explaining its economic moat, cash flow, and pricing power. This practice will help you develop the skills to assess companies like Warren Buffett does, without the immediate financial risk.
  • Create a "market noise" journal to track and reflect on emotional responses to market trends. Whenever you feel tempted to make an investment decision based on hype or a sudden market movement, write down what you're feeling and what the market noise is. Review this journal monthly to identify patterns in your reactions and learn to separate your investment decisions from the emotions and confusion that can cloud judgment.
  • Develop a personal ...

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What Warren Buffett Is Buying, Selling… and Whether You Should, Too

Lessons for Individual Investors From Warren Buffett's Moves

Warren Buffett’s investment strategies are legendary, but individual investors should be careful about trying to emulate his trades.

Copying Buffett's Trades Is Not a Sound Strategy

The narrative strongly cautions against blindly copying Buffett's investment strategy. Buffett operates at a scale that offers unique investment opportunities not available to individual investors. Lapin advises listeners to invest like themselves rather than mimic someone they read about, which implies that replicating Buffett's moves is unlikely to yield the same results for individual investors due to the different financial landscapes each type of investor faces.

Buffett's Unique Investment Opportunities Operate On a Different Scale

Buffett's investment decisions involve managing massive funds and obtaining special deals that individual investors cannot access. His strategies are tailored to the scale at which he operates.

Focus On Durable Businesses With Pricing Power and Strong Cash Flow

Investing in durable businesses with strong cash flow and pricing power is a cornerstone of Buffett's strategy. This implies looking for companies capable of weathering economic downturns and maintaining profitability through their ability to set prices.

Valuation Is Key; Sell Overpriced Stocks

Buffett is known for exiting positions, such as his investments in companies like Apple, partly due to their high valuation. This practice underscores the importance of selling stocks when they become overpriced relative to their intrinsic worth.

Consider the Tax Implications of Investment Decisions

Buffett's strategy involves careful consideration of tax implications. His practices may include selling stocks to lock in gains before potential tax hikes, hi ...

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Lessons for Individual Investors From Warren Buffett's Moves

Additional Materials

Clarifications

  • Warren Buffett's unique investment opportunities stem from his ability to invest large sums of money, allowing him to negotiate special deals and access investments not feasible for individual investors. These opportunities often involve acquiring entire companies or significant stakes in established businesses, which can provide advantages like board seats and influence over company decisions. Additionally, Buffett's long-term investment horizon and patient capital approach enable him to capitalize on opportunities that may require holding investments for extended periods, a luxury not always available to individual investors focused on shorter-term gains. Overall, Buffett's scale, reputation, and network afford him opportunities that are distinct from those typically accessible to individual investors.
  • Pricing power in the context of investing in durable businesses refers to a company's ability to control and adjust its prices without losing customers. Businesses with strong pricing power can maintain or increase their prices even in competitive markets, which can lead to higher profit margins and resilience during economic downturns. This characteristic is attractive to investors as it indicates the company's ability to generate consistent revenue and profitability over time. Understanding a company's pricing power is crucial for assessing its long-term sustainability and competitive advantage in the market.
  • Understanding tax implications in investment decisions is crucial as taxes can affect the overall profitability of an investment. Investors need to consider how different types of income (like capital gains or dividends) are taxed and at what rates. Strategies such as tax-loss harvesting or timing the sale of assets can help minimize t ...

Counterarguments

  • While copying Buffett's trades directly may not be sound, individual investors can still benefit from understanding the rationale behind his investments and applying similar principles to their own investment decisions.
  • Although Buffett's scale is unique, individual investors can sometimes participate in similar types of investments through mutual funds, ETFs, or smaller-scale opportunities that mimic larger deals.
  • Focusing exclusively on durable businesses with pricing power and strong cash flow might lead to a lack of diversification, as investors could miss out on high-growth potential in emerging sectors or innovative companies.
  • The principle of selling overpriced stocks assumes that investors can accurately determine a stock's intrinsic value, which can be highly subjective and prone to error.
  • Tax implications are important, but they should not b ...

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