WARREN Buffett’s Berkshire Hathaway acquired stakes in cosmetics store chain Ulta Beauty and aircraft parts maker Heico during the second quarter when it also nearly halved its huge stake in Apple.
Berkshire owned about 690,000 Ulta Beauty shares worth US$266.3 million and 1.04 million Heico shares worth US$185.4 million as at Jun 30, according to a Wednesday (Aug 14) regulatory filing containing its US-listed holdings as at that date.
Ulta Beauty shares soared 14 per cent and Heico shares rose 3 per cent in after-hours trading, reflecting a belief that the companies won Berkshire’s and perhaps Buffett’s stamp of approval.
Wednesday’s filing did not say whether Buffett did the buying, though his portfolio managers Todd Combs and Ted Weschler normally oversee Berkshire’s smaller stock investments.
Ulta Beauty did not immediately respond to requests for comment.
Heico co-president Eric Mendelson said he was honoured to have Berkshire invest, citing both companies’ decentralised business models. Shares of Hollywood, Florida-based Heico are up 32 per cent this year to Wednesday’s close.
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“I assume that Berkshire is bullish on the aerospace industry as we are,” Mendelson said.
While better known for owning Geico car insurance, the BNSF railroad and Apple stock, Buffett’s Omaha, Nebraska-based conglomerate has stakes in many consumer and retail businesses.
Its business portfolio includes brands such as Benjamin Moore, Dairy Queen, Duracell and Fruit of the Loom, and about US$2.5 billion of stock in grocery chain Kroger.
Ulta Beauty, based in Bolingbrook, Illinois, has about 1,395 stores in all 50 US states.
Berkshire is also familiar with the aerospace sector, having paid US$32.1 billion in 2016 for aircraft parts maker Precision Castparts, still its largest purchase of an entire company.
Buffett later admitted he overpaid for Precision, which struggled with falling air travel during the Covid-19 pandemic and the grounding of Boeing 737 MAX jets.
Snowflake exit
Ulta Beauty and Heico were among Berkshire’s few purchases in a quarter marked by a hasty retreat from stocks.
Berkshire sold US$77.2 billion of stocks during the period, including about 390 million shares of Apple, and bought just US$1.6 billion.
Sales included a nearly US$1 billion investment in cloud computing company Snowflake and Berkshire’s remaining stake in media company Paramount Global.
The selling left Berkshire with US$276.9 billion of cash and equivalents, up from US$189 billion at the end of March.
Buffett’s company has not said if it has since sold more Apple, though Buffett said in May he expected the iPhone maker to remain Berkshire’s biggest stock holding by year-end.
Berkshire has sold more than US$3.8 billion of stock in Bank of America, its second-largest stock holding, in the third quarter. It stopped selling at least temporarily after the bank’s share price fell 12 per cent from mid-July.
During the second quarter, Berkshire also reduced its stakes in Capital One, Floor & Decor Holdings, Louisiana-Pacific and T-Mobile, and added to stakes in Chubb and Sirius XM.
Buffett turns 94 on Aug 30. He has run Berkshire since 1965. REUTERS
