One of the most successful investors of the last 50+ years has always had an eye for value. The big headlines on Friday showed that the “Sage of Omaha” was unloading his long-time holdings in U.S.
bank stocks and buying gold stocks. At the mid-point of each quarter (August 15 in this case), hedge fund managers are required to release their holdings to the SEC. We have usually reported any unusual moves in the gold market by these hedge fund managers. This time around, there have been more “first time” gold buyers than usual. For instance, Mason Capital Partners, Sandell Asset Management and Caxton Associates all initiated new positions in the SPDR Gold Trust, which has followed the price of gold by rising about 30% year to date. But there’s no question that the most outstanding rookie buyer in the gold market is Warren Buffett.
Buffett bought just under 21 million shares of Barrick Gold, which was worth just under $27 a share as of June 30. Those shares rose $3 (+11%) on record-high volume Monday morning this week, so maybe the news that Buffett is buying this particular gold stock has caused the Wall Street mob to follow his lead.
To make room for his gold purchase, Buffett sold bank stocks including JPMorgan and Wells Fargo, and airline stocks including United Airlines and American Airlines. The switch from bank stocks is notable because Buffett once praised bank stocks and panned gold. For instance, in 2009 on CNBC, Buffett said, “I have no views as to where [gold] will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know…Wells Fargo (WFC) will be making a lot of money… it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there.”
P.S. Wells Fargo stock was $28 per share in 2009, and it’s down to $24 now. Gold prices have doubled since Buffet cooked his own goose on this subject in 2009.