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Warren Buffett: Berkshire stock price trades near highs after acquiring stakes in four major drugmakers

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  • Berkshire invested $1.8 billion in each of Abbvie Inc, Bristol-Myers Squibb Co and Merck
  • It also bought a $136 million stake in Pfizer a $276 million stake and $276 million in T-Mobile US
  • Berkshire share price is now trading nearly 15% higher in November

Shares of Warren Buffett’s Berkshire Hathaway (NASDAQ: BRK) trade about 1% lower today after printing record highs yesterday. The conglomerate bought stakes in four major drugmakers, in an effort to benefit from the healthcare industry which could capitalize on recovery from the coronavirus pandemic.

Fundamental analysis: Healthcare bet

According to the regulatory filing, Warren Buffet’s Berkshire invested $5.7 billion in stocks of drugmakers, or $1.8 billion in each of Abbvie Inc, Bristol-Myers Squibb Co and Merck & Co, and an additional $136 million in Pfizer Inc.

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Shares of pharmaceutical companies climbed in after-hours trading Monday.

While Buffet usually carries out major investments himself, the filing showed what his portfolio managers Todd Combs and Ted Weschler consider to be good investment opportunities. 

“COVID-19 has made us think differently about healthcare,” said James Armstrong, president of Henry H. Armstrong & Associates in Pittsburgh, which holds a stake in Berkshire Hathaway.

“The sector has become more efficient as big drug companies partner with smaller, inventive rivals. But you will always need companies with scale for manufacturing and distribution, including vaccines with global application.”

Berkshire also bought a $276 million stake in the telecom company T-Mobile US in the third quarter. The conglomerate sold its $1.3 billion stake in Costco Wholesale Corp, the retailer which thrived during the pandemic as people massively bought groceries and home supplies as they were forced to stay home during the pandemic. 

Berkshire also sold a portion of its shares in investment banks including JPMorgan Chase, Wells Fargo, PNC and M&T. The company slashed its stake in JPMorgan by 96%. 

Furthermore, it also increased its stakes in the retail company Kroger and Bank of America, while it pared its stakes in Apple.

Technical analysis: Shares hit record highs

Berkshire Hathaway share price traveled to $233.46 yesterday to print record highs on positive news concerning Moderna’s Covid-19 vaccine. Shares are now trading nearly 15% higher in November

Berkshire stock daily chart (TradingView)

The price action has pulled back slightly today to trade around the $231 handle as the buyers work to force a weekly close above the previous record high at $231.61. Key short-term support is located at $223.24 – the previous 9-month high for the stock – which is likely to be seen as a solid entry point for BRK buyers

Summary

Berkshire Hathaway said it invested in four major pharmaceutical companies including  Abbvie Inc, Bristol-Myers Squibb Co, Merck & Co and Pfizer as it believes the healthcare sector will benefit from the recovery from the coronavirus pandemic.