For the fifth time since its last shareholder meeting, Berkshire Hathaway (NYSE: BRK.A) has announced that it has sold more shares of Petro-China ADR (NYSE: PTR), trimming back its position from 7.29% to 6.97%.
Berkshire is trading at $121,500 per share as I write this story. The highest price stock on any exchange keeps moving higher as Warren Buffett continues to amaze. Over the last five years he has become a utilities mogul, and this year you can add railroad tycoon to the Oracle of Omaha's many characterizations.
It is not clear why he is selling shares, since his investment is up six-fold in the last five years. However, Berkshire's stake in Petro-China was one of the few areas of contention to ever be raised at a shareholder meeting. This year, because of PTR's business relationship with Somalia Sudan, and the human rights violations in the Darfur region, many shareholders questioned this holding. Buffett seemed to imply he did not want to overtly mix business and politics and thought more could be done from the inside than the outside. Given Buffett's desire to make his moves quietly, it is very possible that he has decided to trim his shares slowly to accommodate concerned shareholders, while not wanting to create negative pressure on the stock price.
It is also possible that he is selling to make a point with PTR, backing up private conversations and his words to shareholders to gain leverage in putting pressure on the company with its foreign business relations. While BRK.A has diminished its holdings considerably, it still holds two-thirds of its original stake even after five sales.
I have been following the story with personal interest because I own shares of both companies and have not sold any shares in either. If I had, I would be the poorer for it, since both BRK.B (I own b-shares) and PTR are up significantly this year, and I have recommended both, PTR as one of my 2007 picks and Berkshire in Chasing Value.
To find potential opportunities and verify my track record, read Chasing Value or Serious Money.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
11-08-2007 @ 6:20AM
Ravi said...
I do not think Mr.Buffett sold PTR because of shareholder pressure or a political stand.
More likely, it is his caution. You and me, if we hold a 100 shares or even thousand, can sell quickly.
Be greedy when others are afraid, and be afraid when others are greedy is his motto.
Professionals sell ahead of the sell-off.
Novices make only two mistakes: one of them is selling too early.
The other one is selling too late.