Billionaire Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE.BRK.B) sold off another 1.375 million of Moody’s Corporation (NYSE:MCO) shares in the past three trading days.
With Monday’s sale, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE.BRK.B) is now left with 11.1 percent state in the parent of the credit rating agency Moody’s Investor Services.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
In a Form 4 with the SEC, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE.BRK.B) has reported sales of Moody’s Corporation (NYSE:MCO) shares on Thursday, Friday and Monday yielding a total of $84.5 million. These sales have left Berkshire with about 25.3 million shares, according to SEC filing on Monday.
Mr. Buffett liked Moody’s because the unique position of the company in credit ratings. It has a wide moat and extremely low capital requirement.
Mr. Buffett has been steadily selling his stake since 2009 when he reported owing 48 million shares. Berkshire once held over 20 percent stake in Moody’s. Buffet has trimmed his MCO stake numerous times in 2010. Interestingly, in 2010 MCO shares were trading for half the amount they are now.
Mr. Buffett, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE.BRK.B) chairman and chief executive, testified before the Financial Crisis Inquiry Commission that he appreciated the firm’s “duopoly” with rival Standard & Poor’s.
Berkshire received its Moody’s Corporation (NYSE:MCO) shares from the spin-off of Dun & Bradstreet (DNB), with a cost base of about $10 a share. Once traded at above $70 a share, Moody’s Corporation (NYSE:MCO) stock price collapsed to below $20 amid its role in the financial crisis and the market crash in 2009. Warren Buffett sold 15 million shares at the prices of $20. The recent bull market pushed Moody’s stock price up to $60 again. This might have prompted Mr. Buffett to sell again.
Moody’s Corporation (NYSE:MCO) is the second largest credit rater after Standard & Poor’s.
Interestingly it has been a while since Warren Buffett’s Berkshire Hathaway has filed Form 4 with the SEC on a stock other than Davita (DVA).
According to SEC filing, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) has sold 800,600 shares on May 2, 2013, while it sold 384,300 on May 3, 2013. The billionaire investor sold 190,111 shares on Monday.
Recently shares of Moody’s Corporation (NYSE:MCO) rose sharply after news that the ratings company was among firms that settled lawsuits accusing them of inflating and concealing the risks in mortgage-related deals.