Warren Buffett, the legendary CEO of Berkshire Hathaway, has recently made some notable changes to his investment portfolio. In the fourth quarter, Berkshire Hathaway liquidated its holdings in S&P 500 ETFs from Vanguard and State Street Global Advisors. This move leaves the bellwether investor without any ETF positions.
The sales of the SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO), each valued at roughly $22 million, underscore Berkshire’s longer-term trend of retreating from securities. For nine straight quarters, Berkshire has been a net seller of securities, lifting its cash position to a record high of $334.2 billion at the end of the year. Despite this, Buffett has brushed off speculation that he views markets as overvalued.
In his recently released annual letter, he stated, “Despite what some commentators currently view as an extraordinary cash position at Berkshire, most of your money remains in equities. That preference won’t change.”
While liquidating ETF holdings, Berkshire Hathaway added to its stake in Domino’s Pizza (NASDAQ: DPZ), a dividend stock that has appreciated 7,120% since January 2010.
Buffett’s focus on Domino’s growth
Domino’s Pizza operates in the competitive quick-service restaurant (QSR) space and has grown to become the largest pizza company in the world. Its success is primarily attributed to its reputation for value and technological innovations like the AnyWare ordering platform and Pinpoint Delivery service. Domino’s has a strategic plan known as “hungry for more,” aiming to boost sales, store count, and profits.
Wall Street projects that Domino’s earnings will grow at an annual rate of 9% through 2028. This growth rate, combined with the company’s stock repurchase program and dividend increases, makes Domino’s an attractive long-term investment. The quarterly dividend has increased at a 17% annual rate over the last five years, with a recent 15% hike to $1.74 per share in the fourth quarter.
Buffett’s stock purchases often lead to significant market interest, given his track record of identifying undervalued companies with solid growth potential. While many investors might be tempted to follow Buffett’s lead, conducting individual due diligence and assessing personal investment goals, risk tolerance, and the broader economic environment before making any investment decisions is important.
Image Credits: Photo by Maarten van den Heuvel on Unsplash
