Warren Buffett has a secret stock in hisportfolio .- The billionaire investor's
Berkshire Hathaway conglomerate omitted "confidential information" in its quarterly portfolio update on Monday, instead filing it separately with financial regulators. - "He is undoubtedly building a large position now," said
David Kass , afinance professor at the University of Maryland and a close follower of Buffett and his company. - "I suspect that Berkshire is building a large position in a public company and they would like to continue to do that before disclosing it," said
James Shanahan , an Edward Jones analyst who covers Berkshire. - Buffett has kept investments confidential in the past, including Phillips 66 in 2015 and IBM in 2011.
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Warren Buffett is buying a new stock but doesn't want to spill the beans just yet.
It appears the famed investor secured permission from regulators to not disclose his ongoing purchase in Berkshire Hathaway's 13F filing for the third quarter, which was published on Monday.
"Confidential information has been omitted from the public Form 13F report and filed separately with the US Securities and Exchange Commission," the filing reads.
The Berkshire chief probably wants more time to grow his nascent stake. Revealing it might spur other investors to buy the same stock, driving up the price that Buffett has to pay.
"He is undoubtedly building a large position now and may reveal it in his next 13F," David Kass, a finance professor at the University of Maryland who has closely followed Buffett for more than 30 years, told Business Insider.
"Buffett has received confidentiality treatment several times in the past," Kass continued. "I believe most recently around 2015 he was building a position in Phillips 66."
Indeed, the confidentiality clause appears in Berkshire's 13F for the second quarter of 2015, published in August of that year. Buffett and his team disclosed a $2.5 billion stake in Phillips 66 in an amended 13F filing a few weeks later.
Berkshire's 13F forms for the first and second quarters of 2011 also excluded a holding "pursuant to a request for confidential treatment."
A flurry of filings in November of that year revealed Buffett's company had been buying IBM, growing its stake in the computing giant from 4.5 million shares in March, to 24.8 million shares in June, then 57.3 million shares worth more than $10 billion at the end of September.
Buffett and his team appear to be keeping an investment confidential once again.
"I suspect that Berkshire is building a large position in a public company and they would like to continue to do that before disclosing it," James Shanahan, an Edward Jones analyst who covers Berkshire, told Business Insider.
Berkshire's third-quarter earnings pegged the value of its equity portfolio on September 30 at $245 billion excluding Kraft Heinz, Shanahan pointed out. However, its 13F filing showed only $220 billion in holdings.
The company's roughly $6 billion investment in five Japanese trading houses over the 12 months to August only partly accounts for that difference in value, he added. The covert investment might be the missing link.
Buffett's hidden holding is the latest sign that he's itching to deploy Berkshire's vast cash reserves after taking cover from the pandemic earlier this year.
Berkshire — which exited the "big four" airline stocks at a loss and slashed its bank holdings in the second quarter — announced more than $19 billion worth of investments during the third quarter, and revealed about $6 billion in new pharmaceutical holdings in its portfolio update on Monday.