Warren Buffett minds his own business quite well. He doesn’t typically suggest that other investors buy or sell specific stocks.
However, it’s possible to get a pretty good sense of what the Oracle of Omaha thinks by watching his moves with Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) portfolio and his public comments. Here are three stocks Buffett would probably tell you to sell — and one he’d likely recommend buying.
Sell, sell, sell
Buffett talked with CNBC in Japan on April 12, 2023, and was asked about a couple of stocks that Berkshire has reduced its positions in significantly in recent months. The legendary investor said he made the call himself to sell most of Berkshire’s stake in Taiwan Semiconductor Manufacturing (NYSE: TSM). When asked why he dumped shares so soon after building a large position in the chipmaker, Buffett replied that Taiwan Semi is “one of the best companies in the world.” However, he acknowledged that he reevaluated the geopolitical risk with China, which claims Taiwan as part of its territory.
Berkshire has also cut its stake in BYD (OTC: BYDD.F), an electric vehicle maker based in mainland China. Buffett said that BYD is “an extraordinary company.” However, he seemed to think the valuation wasn’t as attractive as when Berkshire first bought shares. Buffett stated, “We’ll find things to do with the money that I’ll feel better about.”
The multibillionaire didn’t mention Netflix (NASDAQ: NFLX) at all. But he took a veiled shot at the company, saying that streaming is “not really a very good business.” Buffett’s comments were actually made in response to a question about Paramount Global, which Berkshire has a stake in and is in the streaming business itself. Unlike Netflix, though, Paramount makes money in avenues outside of streaming.
Buffett’s likely buy recommendation
Which stock would Buffett likely recommend buying (besides Berkshire Hathaway itself)? That’s easy — Apple (NASDAQ: AAPL). We can know, without a doubt, the legendary investor’s mindset about the tech giant. Apple remains, by far, the largest holding in Berkshire’s portfolio.
Buffett told CNBC’s Becky Quick that when Berkshire acquired Alleghany last year, it kept only two of the stocks the property and casualty insurer owned — Berkshire Hathaway and Apple. He noted that Alleghany had more than 20 stocks, but Berkshire sold all except those two.
As in the past, he called Apple “a wonderful business.” Buffett even argued that Apple’s iPhones are so popular that if a user were offered $10,000 to give up their iPhone and never buy another, they’d turn the money down.
Interestingly, Buffett didn’t seem to be all that concerned about the risks for Apple, given its supply chain relationships with Chinese companies and Taiwan Semi, stating only that “I weigh that in.” That weighing wasn’t enough to turn him against the stock, though.
Putting words in Buffett’s mouth
Am I putting words in Buffett’s mouth by maintaining that he’d likely recommend selling Taiwan Semi, BYD, and Netflix and buying Apple? Yes, I’m guilty as charged.
However, Buffett is obviously much less enamored with Taiwan Semi and BYD than he’s been in the past. He also clearly doesn’t think much of streaming, which is Netflix’s bread and butter. And he, without question, continues to really like Apple.
I think Buffett said something else in his CNBC interview that’s instructive. After talking about selling shares of BYD, he noted that his “job is to allocate the capital” for Berkshire. Buffett said he allocates capital “the way I would do it for my sister because she is a big shareholder,” adding, “And that’s the way I feel about all the millions of shareholders we have.”
If you handed your money over to Buffett today and owned shares of Taiwan Semi, BYD, and Netflix, it’s a good bet he’d sell at least some of all three stocks. He’d probably also add shares of Apple (although he would, perhaps, wait for a pullback). While I’ve definitely put words in Buffett’s mouth, they’re words I think he’d use if he were minding your business as he minds his own.
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Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, BYD, Berkshire Hathaway, Netflix, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.