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Warren Buffett is going all in on the vaccine rally, piling into these stocks

November 17, 2020, 10:55 AM UTC

Warren Buffett’s Berkshire Hathaway Inc. is betting on big pharma as the industry’s fortunes swing on the development of a Covid-19 vaccine and therapeutics.

Berkshire disclosed new investments in Merck & Co. and Pfizer Inc. during the third quarter, while also adding bets on AbbVie Inc. and Bristol-Myers Squibb Co., according to a regulatory filing Monday. Meanwhile, Buffett’s conglomerate continued to cut stakes in financial companies, including Wells Fargo & Co. and JPMorgan Chase & Co.

Berkshire started snapping up the health stocks just months ahead of a disclosure from Pfizer and BioNTech SE that their vaccine protects most people from Covid-19, news that sent Pfizer stock soaring. Merck has also been pushing ahead with therapies for the virus.

The bets give Berkshire more exposure to pharmaceutical companies as officials prepare to ramp up efforts to distribute a Covid-19 vaccine whenever one is approved. Buffett’s company had stakes valued at more than $1.8 billion each in AbbVie, Bristol-Myers Squibb and Merck at the end of the quarter, and about $136 million in Pfizer. Berkshire omitted some confidential information with its routine regulatory filing.

Buffett, 90, has been cautious during the pandemic, saying in May that his then-record cash pile wasn’t that huge when considering the worst-case possibilities. He’s since deployed cash in Japan and into natural-gas assets, and has bought back Berkshire’s own stock. His friend Bill Gates, a former Berkshire board member, has been donating through his foundation to help fund vaccine efforts.

Buffett, Berkshire’s chairman and chief executive officer, dumped airline stocks and sold financials earlier in the crisis. His company continued to pare bank holdings in the third quarter, trimming Berkshire’s Wells Fargo stake and slashing its JPMorgan investment by 96%. Berkshire also cut stakes in PNC Financial Services Group Inc. and M&T Bank Corp.

Berkshire has been chipping away at its Wells Fargo stake in recent months after more than three decades holding onto that bet. It held about 127 million shares at the end of September, a marked shift for an investment that once ranked as Berkshire’s biggest.

Berkshire also took a stake in T-Mobile US Inc. during the third quarter, a holding valued at $276 million.