Buffett pulls back on banks and bets on drugmakers

Warren Buffett’s Berkshire Hathaway placed a $5.7bn bet on four US pharmaceutical stocks in the third quarter, as the billionaire investor dumped holdings in several of the largest US banks.

Berkshire added 21.3m shares of AbbVie, 30m shares of Bristol-Myers Squibb, 22.4m shares of Merck and 3.7m shares of Pfizer to its $245bn equity portfolio, according to a filing with the US securities regulator on Monday.

The investment in drugmakers by “the Oracle of Omaha” will be closely scrutinised by Wall Street in an era of Covid-19, given Mr Buffett has not waded far into the healthcare sector in recent years.

Both Pfizer and Merck are developing coronavirus vaccines to stop people developing the disease, and last week positive early data from Pfizer’s trial briefly sent the company’s shares to their highest level in more than a year.

Even after the multibillion-dollar investment, though, Mr Buffett was a relatively small investor in the four groups at the end of the quarter. Berkshire’s new stake accounted for 1.3 per cent of Bristol-Myers shares outstanding, 1.2 per cent of AbbVie, 0.9 per cent of Merck and less than 0.1 per cent of Pfizer.

The four new purchases more than doubled the size of Berkshire’s investments in healthcare in the third quarter to $9.3bn in total. The company already held stakes in the drugmakers Biogen, Johnson & Johnson and Teva Pharmaceuticals and DaVita, a kidney dialysis company.

Mr Buffett did not respond to a request for comment.

Berkshire cut its stake in several large banks during the quarter, including Wells Fargo, JPMorgan Chase and PNC Financial.