Warren Buffet is arguably the most successful investor of all time. And while he is known as both a value investor and a long-term, buy-and-hold market participant, he’s not averse to selling a stock if it runs against him or the reasons why he bought shares in the first place turn out to be incorrect.
While Buffett likes to say that his “favorite holding time is forever,” the reality is he has only held a few stocks such as Coca-Cola (NYSE:KO) and American Express (NYSE:AXP) for multiple decades. In some cases, he holds stocks for less than two years. In a few instances, he sold stocks he bought in a matter of months after deciding quickly that he made a bad decision.
The bottom line is that the man seems willing to eject Warren Buffett stocks from his Berkshire Hathaway (NYSE:BRK.A/NYSE:BRK.B) holding company whenever he loses confidence in a bet he made. The latest 13F regulatory disclosure shows that Warren Buffett just sold these three stocks. You should too.
General Motors (GM)
Buffett cut his position in automaker General Motors (NYSE:GM) by 45% during Q2 of this year after previously reducing it by 20% in Q1. The company now owns 22 million shares worth just under $730 million. Buffett first bought GM stock in 2012 when it was trading around $25 a share. Fast forward a decade, and the stock is currently trading 40% higher. However, in the last five years, GM stock has declined 8%. Buffett has now sold shares in General Motors during four of the last five quarters.
The unwinding of his position comes as the automotive giant struggles to keep its electric vehicle production on schedule in the highly competitive and fragmented motor vehicle industry. General Motors also faces the prospect of a strike as collective bargaining with the United Auto Workers (UAW) union is now underway, with workers seeking double-digit wage gains that could hurt GM’s bottom line. Buffett has likely concluded that things are going to get worse at General Motors before they get better.
Activision Blizzard (ATVI)
Buffett admits to taking a stake in video game maker Activision Blizzard (NASDAQ:ATVI) because the company agreed to be acquired by Microsoft (NASDAQ:MSFT) for $95 a share in cash. Buffett said his position in Activision Blizzard is an arbitrage bet. He’s basically betting that Microsoft’s acquisition would close as planned. Buffett initially bought just under 50 million shares of ATVI stock. The position is now down to 14.7 million shares as Buffett has steadily reduced his holding.
Buffett now owns about $1.35 billion of Activision Blizzard stock and has reduced his position as the acquisition by Microsoft, which would be the biggest deal in video game history, has proven to be contentious and run into regulatory hurdles in multiple jurisdictions. In the U.S., the Federal Trade Commission (FTC) unsuccessfully sued to block the deal, claiming it would hurt consumers. More recently, Microsoft submitted a revised deal for its takeover of Activision to appease British regulators.
While the purchase of Activision Blizzard may still conclude at the agreed-upon price, Buffett appears to have lost some patience with the deal. ATVI stock is currently trading at around $91 per share.
Celanese (CE)
After establishing a position in industrial chemical company Celanese (NYSE:CE) in the first quarter of 2022, Buffett appears to have quickly had a change of heart. After reducing his position in CE stock during the year’s first quarter, Buffett continued offloading the stock in Q2 of this year, lowering his position by about 40%. Buffett now owns 5.36 million shares of Celanese stock worth just over $650 million. Celanese’s chemicals are used to make paints and industrial coatings.
The sale of Celanese stock comes as the share price has eroded since Buffett opened his position, buying in at more than $140 per share. Since Q1 of 2022, Celanese’s share price has declined 30%, though it was down nearly 50% last autumn. The erosion in the share price is due to a series of poor financial reports, with its most recent Q2 print showing a big drop in earnings per share. This is a rare miss for Buffett, who has famously said that he doesn’t like investing in turnaround stories, which is what Celanese is at this point.
On the date of publication, Joel Baglole held long positions in GM and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
