Warren Buffett’s Berkshire Hathaway sold Biogen, halved its Merck stake, and boosted its Kroger bet. Here’s a closer look at its key trades in Q2.

warren buffett
Warren Buffett.
  • Warren Buffett's Berkshire Hathaway sold its Biogen stock and slashed its Merck stake last quarter.
  • The investor's company bought more Kroger shares, and has now tripled its stake in 18 months.
  • Here's a closer look at some of its key trades in the second quarter.
  • See more stories on Insider's business page.

Warren Buffett's Berkshire Hathaway sold all of its Biogen stock, slashed its Merck stake, and ramped up its Kroger position in the second quarter, its latest portfolio update revealed.

The famed investor's conglomerate made few other changes to its stockholdings last quarter, making those trades especially notable. Here's a closer look at them.

1. Biogen

Berkshire invested in Biogen, the biotech behind the Alzheimer's drug Aduhelm, in the fourth quarter of 2019. It trimmed its stake by 1% to around 643,000 shares during the next quarter, and maintained that position for the next 12 months.

Buffett's company cashed out its Biogen shares last quarter, potentially capitalizing on the drugmaker's stock price surging to a record high in June after federal regulators approved Aduhelm. Berkshire at least broke even on the investment, based on Biogen's average stock price last quarter, and may have notched a $50 million profit if it sold at the peak - an estimated 25% return in around 18 months.

2. Merck

Berkshire initially bought around 22 million shares of Merck in the third quarter of 2020, then boosted its position in the drugmaker to nearly 29 million shares worth $2.3 billion during the next quarter. However, it reversed course in the first half of this year, slashing its stake by more than two-thirds, to about 9 million shares as of June 30.

Buffett's company has taken a similar approach with AbbVie and Bristol Myers Squibb. It established stakes in the two pharmaceutical groups in the third quarter of 2020, boosted those positions over the next three months, then cut its stakes in both companies during the first half of this year.

Merck stock is almost flat year-to-date, while AbbVie and Bristol Myers Squibb shares are up about 12%, suggesting Berkshire has broadly made money on its recent sales.

Buffett has previously underscored his interest in owning a "basket" of pharmaceutical stocks, but the recent sales suggest a case of buyer's remorse. The investor foreshadowed the latest disposals in May, when he noted that Berkshire had invested in a group of stocks that he didn't have any special insights into, felt "kind of so-so" about, and wasn't "wildly comfortable" owning. Berkshire's pharma bets, which also included a small stake in Pfizer that was quickly sold, fit that description.

3. Kroger

Berkshire more than tripled its stake in the premium grocer from an initial 19 million shares at the end of 2019, to 62 million shares as of June 30 this year. Its position soared in value from $549,000 to $2.4 billion during that period, reflecting Berkshire's share purchases and a roughly 33% increase in Kroger's stock price.

Kroger stock has marched higher over the past six weeks, lifting the value of Berkshire's stake to about $2.7 billion today. Berkshire's sustained buying of the stock over the past 18 months, a period when the company eviscerated key holdings including Wells Fargo and eliminated others such as JPMorgan, underscores how bullish it is about the business.

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