Berkshire reveals $6.72 billion Chubb stake, insurer's shares rise (updated)

Louisiana-Pacific

15/05/2024 22:51

(Adds analyst comment, Chubb share price, background)
    By Jonathan Stempel
       May 15 (Reuters) - Warren Buffett's Berkshire Hathaway
 BRKa.N  on Wednesday revealed a new, $6.72 billion stake in the
insurer Chubb  CB.N , confirming months of speculation that it
had made a big new investment.
    Berkshire owned 25.92 million Chubb shares as of March 31,
according to a regulatory filing detailing Berkshire's
U.S.-listed holdings as of that date.
        The disclosure sent Chubb's share price to a record high
in after-hours trading, rising 6.3% to $268.96.
  
        Shares often rise when Berkshire reveals new holdings,
reflecting what investors believe is Buffett's seal of approval.
  
        "Chubb is an attractive equity investment for Berkshire
because it operates in a business Berkshire knows well:
property-casualty insurance," Cathy Seifert, a CFRA Research
analyst who covers Berkshire, said in an email.
  
        Seifert would not speculate whether Berkshire might buy
all of Chubb, but said Chubb's focus on commercial lines
specialty coverage and high-end homeowners' protection would be
a "good fit" in Berkshire's insurance and reinsurance portfolio.
  
        Berkshire ended March with $189 billion of cash and
equivalents. 
  
        At Berkshire's annual meeting on May 4, Buffett said the
cash stake could reach 
    $200 billion
     by June, and that cash looked "quite attractive" relative
to high-priced stocks and in light of "what's going on in the
world."
    
        Chubb and Berkshire did not immediately respond to
requests for comment.
  
        Berkshire began buying Chubb in last year's third
quarter, and had obtained U.S. Securities and Exchange
Commission permission to temporarily keep its purchases
confidential.
  
        Buffett occasionally requests such permission to keep
investors from piggybacking on him before he's done buying.
  
        In recent years, Berkshire obtained similar SEC
permission for its investment in Chevron  CVX.N  and former
investments in Exxon Mobil  XOM.N , IBM  IBM.N  and Verizon
 VZ.N .
  
        The Chubb investment was revealed 10 days after
Berkshire unexpectedly disclosed it had 
    sold
     about 115 million Apple  AAPL.O  shares in the first
quarter.
  
        That reduced its holdings in the iPhone maker to $135.4
billion, or 40% of its $335.9 billion equity portfolio.
  
        Apple accounted for most of the $20 billion in stock
that Berkshire sold in the first quarter.
  
        Berkshire also pared holdings of several other stocks,
including Louisiana Pacific  LPX.N  and Sirius XM  SIRI.O , and
exited its investment in computer maker HP  HPQ.N . It bought
just $2.7 billion of stocks in the quarter.
  
        Wednesday's filing does not identify which investments
were made by Buffett or his portfolio managers Todd Combs and
Ted Weschler.
  
        Buffett, 93, has run Berkshire since 1965.
  
        The conglomerate also owns dozens of businesses
including the Geico car insurer, BNSF railroad, energy and
industrial companies, and consumer brands such as Benjamin
Moore, Dairy Queen, Duracell, Fruit of the Loom and See's
Candies.
  

 (Reporting by Jonathan Stempel in New York; editing by Jonathan
Oatis and David Gregorio)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))