The Oracle of Omaha is by far the most well-known long-term investor we have alive today, and if you are a newbie, looking into Warren Buffett stocks to sell is a good way to weed out the bad stocks from your portfolio. I believe Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) alone makes for a pretty good starter portfolio, as it acts like an exchange-traded fund with solid growth. However, if you have individual holdings and are targeting more growth, it still makes sense to mirror some of Buffett’s moves.
This is a man who has been in the market for the past 82 years. He definitely knows the ins and outs of many sectors, so it can pay to research his buys and sells. I’ll discuss seven stocks Buffett has sold in the past year and why you should consider trimming these positions yourself.
That said, I’d warn you that you should stay away from shorting any of these stocks. Buffett only invests in quality, long-term businesses, and he also sells them when he sees that these stocks will deliver lower returns. It does not necessarily mean he expects total doom for these companies. With that in mind, let’s take a look.
Sirius XM (SIRI)
Sirius XM (NASDAQ:SIRI) provides satellite radio and audio entertainment services in North America. While the company reported a 7% increase in advertising revenue to a record $400 million, subscription revenue dropped by 1% year-over-year. I believe Sirius XM’s growth story is losing steam as traditional radio continues to face secular declines. The company is betting big on podcasting, but that market appears to be reaching a saturation point as well.
Management touts a new SiriusXM app and digital infrastructure investments, but these moves seem more defensive than growth-oriented. With analysts projecting anemic 1% annual revenue growth ahead and earnings per share only expected to inch up from 30 cents to 39 cents by 2028, I’m skeptical about the upside. Sirius XM’s $9.6 billion debt load further constrains its flexibility.
CEO Jennifer Witz cites “promising engagement indicators” for the new app, but that feels like grasping at straws. Not much action is expected going forward.
Unless subscriptions reaccelerate markedly, I expect muted gains going forward. Sirius XM’s best days may be behind us. Buffett trimmed his positions here by 8.85%.
Paramount Global (PARA)
Paramount Global (NASDAQ:PARA) is a media and entertainment company that owns CBS, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, and Showtime. I’m concerned about Paramount’s stock, which plummeted by over 75% in the past five years despite some recent signs of financial recovery in its latest earnings report.
In Q1 2024, Paramount’s total revenue increased by 6% to $7.7 billion and adjusted operating income before depreciation and amortization OIBDA by 80% to $987 million. Direct-to-consumer advertising revenue also increased 31%, driven by Pluto TV and Paramount+. However, the stock remains incredibly volatile.
A big overhang is the potential merger with Skydance, which is reportedly on shaky ground. Shari Redstone, a major Paramount shareholder, is allegedly displeased with Skydance reducing its merger valuation from $5 billion to $4.75 billion. If this deal falls through, I worry the stock could decline even further.
Given the uncertainty around the Skydance deal and Paramount’s long-term struggles, risk-averse investors may want to consider trimming positions for now. Buffett reduced his stake here by 88.1%.
Bristol-Myers (BMY)
Bristol-Myers Squibb (NYSE:BMY) develops and sells biopharmaceutical products globally. The company reported Q1 revenue of $11.87 billion, up a modest 4.7% from a year ago, while posting a concerning loss of $4.40 per share.
Eliquis, Opdualag, Reblozyl, Yervoy, and Breyanzi showed strength in the quarter. However, the competitive pressures in the industry weighed on Abecma sales. Management believes they can return Abecma to growth with the recent KarMMa-3 approval, but I remain skeptical.
Inventory fluctuations and gross-to-net adjustments impacted Opdivo, Camzyos, and Sotyktu revenues, masking underlying demand growth. While Bristol-Myers made pipeline progress with new approvals and trial initiations, I don’t see any potential blockbusters that could meaningfully accelerate growth.
The stock has been a falling knife, and bulls expect a major recovery ahead. That’s certainly possible if everything goes right, but it will likely be a multi-year journey. I’d consider trimming positions here. Investors seeking juicier returns are better off rotating into biopharma names with more exciting growth prospects in the near-to-medium term. Buffett’s second portfolio in New England Asset Management slightly trimmed positions here.
Celanese Corporation (CE)
Celanese Corporation (NYSE:CE) manufactures and sells chemical products worldwide. At the same time, the company posted Q1 earnings per share of $2.08 that beat estimates by 17 cents, revenue of $2.61 billion missed by $71.76 million and declined 8.48% from a year ago. CEO Lori Ryerkerk noted that demand remains lackluster, especially in Europe and China exports. Construction and coatings end markets are still particularly weak.
I’m concerned about Celanese’s bloated $13.8 billion debt load and uninspiring growth prospects. Analysts expect EPS to stay flat from 2025 to 2028 with anemic revenue growth. The stock’s 1.9% dividend yield provides little consolation.
Trading at nearly 13x forward earnings, Celanese looks overvalued, given its stagnant outlook. While management hopes for a second-half recovery, I don’t see any imminent catalysts to reignite the stock. Cost pressures could further squeeze margins, too.
Celanese benefited from pandemic-era demand, but that tailwind has also reversed. With superior chemical plays available, I expect Celanese to underperform the sector going forward. Buffett sold his entire stake by Q3 2023.
RH (RH)
RH (NYSE:RH) is a luxury home furnishings retailer. I believe the boom times for this company are long gone, and it’s no surprise RH has been one of the biggest victims of the housing cooldown that started in late 2021. While there is solid demand for housing, costs have been stubbornly slow to come down. This leads me to believe we won’t see particularly robust growth in the near term that would spark a meaningful recovery in RH shares.
Management expects a gradual rebound starting this year, but the most worrying trend is that EPS and revenue estimates have consistently moved lower over the past two years. RH is also saddled with a concerning $3.7 billion debt load. In my view, management made a critical misstep by spending billions on share buybacks when they should have prioritized debt reduction instead.
It finally froze buybacks last year, but I think RH stock will continue to underperform its peers going forward if current trends continue. Buffett sold all his RH last year.
KeyCorp (KEY)
KeyCorp (NYSE:KEY) is a regional bank holding company based in Cleveland, Ohio. While KeyCorp’s stock has staged an impressive recovery over the past year, I believe now may be an opportune time for investors to consider taking some profits off the table.
The bank’s juicy 5.9% dividend yield is certainly the most compelling aspect of the stock at current levels. EPS growth guidance going forward seems solid. However, with the stock trading at a premium valuation, much of this optimism appears to be already baked into the price.
I’m particularly concerned about KeyCorp’s substantial $25 billion debt load. This could become increasingly taxing in a higher-for-longer interest rate environment. The bank reported an 11% year-over-year decline in revenue to $1.53 billion and missed EPS estimates by 3 cents at 20 cents per share. While management remains upbeat, I suspect interest rate cuts won’t come fast enough to justify chasing the stock at these levels. Income investors may still find the yield attractive, but I’d be cautious about adding new money here. Buffett’s New England Asset Management portfolio trimmed its positions here.
General Motors (GM)
General Motors (NYSE:GM) manufactures and sells automobiles worldwide. While GM posted solid Q1 results with EPS and revenue beats, I believe it may be time to consider taking some profits off the table. Sure, the company is executing well in the near term, with strong performance from its pickups, SUVs, and growing EV portfolio. However, looking ahead, earnings are projected to remain flat starting next year and potentially decline thereafter.
GM does generate robust cash flow and announced a $10 billion buyback last year, but I think increasing the dividend would have been more prudent. The current 1% yield seems insufficient to address long-term concerns if earnings stagnate as expected. With $124.6 billion in debt and only $20.5 billion in cash, GM’s balance sheet isn’t exactly fortress-like.
Most of GM’s strengths appear priced in at current levels. I don’t see a compelling case for meaningful upside in the years ahead. While it may be a controversial call, I’d consider trimming. Buffett sold his entire GM stake in Q3 2023.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
