Warren Buffett of Berkshire Hathaway revealed a new $6.72 billion investment in insurance firm Chubb in a regulatory filing on Wednesday, which propelled the company’s stock to an all-time high. His conglomerate Berkshire Hathaway has bought nearly 26 million shares of Zurich-based Chubb for a stake worth $6.7 billion.
Berkshire owned 25.92 million shares in Chubb as of March 31, according to a regulatory filing that details Berkshire’s U.S.-listed holdings as of that date. The property and casualty insurer became Berkshire’s ninth biggest holding at the end of March.
Chubb stock
The Chubb stock, which edged slightly lower by 0.13% during the day’s trading session, soared by more than 7.5% in after-hours trading to $271.96 a share as of Wednesday evening following the news of Berkshire’s stake. The stock was a record high price. The Chubb stock has gained about 12% year to date.
Effect of Buffett stake in Chubb
The gains in Chubb shares mirror the tendency of stocks rising after Berkshire Hathaway reveals them as new stake in its portfolio as it reflects what investors view as Buffett’s seal of approval.
Warren Buffett investment
Warren Buffett’s Berkshire Hathaway disclosed a sizable new investment in insurance firm Chubb in a regulatory filing on Wednesday.
“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 reviewed by Reuters.
The filing indicated that Berkshire ended the month of March with $189 billion in cash and equivalents a record high stockpile for Buffett’s conglomerate.
Rise in Berkshire cash stake
Buffett had signaled at Berkshire’s annual meeting on May 4 that the company’s cash stake could rise to $200 billion by June. He said at the time that holding cash looked “quite attractive” as an alternative to high-priced stocks and uncertainty around “what’s going on in the world.”
Warren Buffett cuts Apple stake
Berkshire reduced its stake in Apple by about 22% to $135 billion as of March 31, a sale that resulted in an $11.2 billion after-tax gain on the investment. Buffett said that he expects Apple to remain Berkshire’s largest stock investment for the foreseeable future despite paring back its stake in the tech giant.
Buffett’s Chubb stake
The company began buying Chubb stock in the Q3 of last year and obtained permission from the Securities and Exchange Commission (SEC) to temporarily keep its purchases confidential.
Buffett’s firm occasionally makes such requests to defer the public disclosure of investments until it has bought the intended amount of shares in the stock to prevent other investors and the public from piggybacking on the purchases.
Buffett’s other investments and plan
Buffett, 93, has run Berkshire since 1965 and spoke at length about his succession plans at Berkshire’s annual meeting earlier this month.
Buffett outlined his succession plan for Berkshire Hathaway at the company’s recent annual meeting. Berkshire has in recent years obtained similar SEC permission for its investment in Chevron and former investments in ExxonMobil, IBM and Verizon.
The filing doesn’t indicate whether the investments were made by Buffett or Berkshire portfolio managers Todd Combs and Ted Weschler.
