Berkshire Buys $6.7B Chubb Stake, Trims Apple, Stock Up 9.9%

Berkshire Hathaway unveils a $6.7 billion stake in Chubb, signaling confidence in the insurance sector amidst portfolio adjustments.

By Bill Bullington

5/15, 16:56 EDT
Apple Inc.
Aon plc
Chubb Limited
Marsh & McLennan Companies, Inc.

Key Takeaway

  • Berkshire Hathaway reveals a $6.7 billion stake in Chubb Ltd., driving Chubb's stock up by 9.9% in after-hours trading.
  • The investment highlights Berkshire's confidence in the insurance sector, alongside adjustments like trimming its Apple Inc. stake.
  • With cash reserves at $189 billion, Berkshire's strategic moves reflect Buffett's nuanced investment approach and market anticipation.

Berkshire's Big Reveal

Warren Buffett's Berkshire Hathaway Inc. has disclosed a significant $6.7 billion stake in insurer Chubb Ltd., marking the end of speculation over Berkshire's mysterious financial firm investment. This revelation, detailed in a regulatory filing, showcases Berkshire's strategic moves in the insurance sector, a domain where Buffett's conglomerate holds considerable expertise. The stake in Chubb, acquired since 2023 and kept confidential with the SEC's approval, underscores Berkshire's ongoing interest in insurance, alongside its investments in other industry players like Aon Plc and previous stakes in Marsh & McLennan Cos.

Chubb's Market Response

Following the disclosure, Chubb's stock experienced a notable surge, climbing as much as 9.9% in after-hours trading. This positive market reaction reflects investor confidence in Berkshire's investment choices, particularly given Buffett's acumen in identifying value within the insurance industry. Chubb, a prominent property and casualty insurer, has seen its shares gain approximately 12% year to date, further buoyed by Berkshire's backing.

Berkshire's Portfolio Adjustments

In addition to the Chubb investment, Berkshire Hathaway has made several adjustments to its portfolio. Notably, the conglomerate trimmed its stake in Apple Inc., despite Warren Buffett's praise for the tech giant and its significance as Berkshire's largest investment. This move comes amid various challenges faced by Apple, including antitrust fines and operational hurdles. Meanwhile, Berkshire's cash reserves have swelled to a record $189 billion, with Buffett hinting at the possibility of reaching $200 billion by quarter's end. These portfolio decisions reflect Berkshire's strategic realignment and Buffett's investment philosophy.

Street Views

  • David Kass, University of Maryland (Neutral on Berkshire Hathaway's strategy):

    "Millions of people follow what Buffett does... Warren Buffett would be more sensitive to the issue than others."