Warren Buffett’s Secret Investment Revealed as Berkshire Expands Insurance Interests

Warren Buffett’s Secret Investment Revealed as Berkshire Expands Insurance Interests
Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview in Omaha, Neb., on May 7, 2018. (Nati Harnik/AP Photo)

Warren Buffett’s Berkshire Hathaway has finally revealed its new billion-dollar investment, which was kept under wraps during a preparatory period that has lasted since last year.

Mr. Buffett’s new investment is a $6.7-billion stake in insurance company Chubb, which garnered him 26 million shares in the company—or a 6.4-percent stake. The move was revealed in a Wednesday Securities and Exchange Commission filing of Berkshire’s first quarter investments.

Mr. Buffett’s company had shielded its new investment from public knowledge as it was building the stake, requesting “confidential treatment” from the SEC in previous filings.

Chubb, an insurance business that operates in 54 countries, made headlines in March after the company underwrote President Donald Trump’s nearly $92-million appeal bond in the E. Jean Carroll defamation lawsuit. Chubb is listed on the New York Stock Exchange, and is an S&P 500 company. It has executive offices in Zurich, New York, London, Paris, and a number of other locations, and employs approximately 40,000 people worldwide.

Avid Following

Famous for his investing prowess, Mr. Buffett has amassed a sizable following of investors who mimic his portfolio moves, and Berkshire Hathaway’s stake in Chubb proved no exception. Chubb’s stock jumped more than 8 percent in after-hours trading on Wednesday.

CFRA Research analyst Cathy Seifert said in a note to investors that Chubb is now one of the 10 biggest holdings in Berkshire’s portfolio. “We can’t speculate whether Berkshire would pursue an outright acquisition of CB, but we note their business mixes are highly complementary,” Ms. Seifert wrote.

The quarterly filing doesn’t say clearly whether Mr. Buffett or one of Berkshire’s two other investment managers made the Chubb investment, but it is understood that Mr. Buffett generally handles any stakes worth $1 billion or more.

Mr. Buffett’s bet on Chubb is familiar territory: insurance companies Geico, National Indemnity, and General Re are all subsidiaries of Berkshire Hathaway.

The investment in Chubb underscores Berkshire Hathaway’s investment strategy in recent months. It seems to have doubled down on financial companies like Ally Financial, American Express, and Bank of America, while trimming its investments in consumer products.

In February, Berkshire disclosed that it sold off 10 million shares of Apple in the first three months of the year, though Apple remains the holding company’s largest investment. Berkshire still holds nearly 790 million Apple shares, and Mr. Buffett told shareholders that he expected the iPhone maker to remain a long-term holding. Berkshire also sold 80 million shares of printer manufacturer HP in the fourth quarter of 2023, reducing its holding by 78 percent.

Mr. Buffett also revealed that Berkshire had sold off all of its Paramount Global investment at a loss. That sale happened after the first quarter had ended, however, because Wednesday’s report showed Berkshire still owning more than 7.5 million shares.

Berkshire has also been filing regular updates as it purchases Liberty Media stock, because it holds more than 10 percent of that stock. According to the latest reports, Berkshire held 70 million Liberty Media Series C shares and more than 35 million Liberty Media Series A shares.

CNN Wire and The Associated Press contributed to this report.

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