Quiver Quantitative - Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) (BRK.A) has disclosed a significant new investment in the insurance sector, revealing a $6.72 billion stake in Chubb (NYSE:CB). This revelation ends months of speculation about Berkshire’s mystery financial position, previously concealed in regulatory filings. The conglomerate's investment was detailed in a regulatory filing, showing that Berkshire owns 25.92 million shares of Chubb (CB) as of March 31, 2024. The Securities and Exchange Commission had granted Berkshire permission to keep this investment confidential while it was still accumulating shares, a common practice to prevent market disruptions.
The move is a strategic play within an industry Berkshire knows intimately. The conglomerate already owns several insurance companies, including Geico and National Indemnity, which Buffett has often described as the core of Berkshire’s operations. These companies generate "float," a stream of capital that can be reinvested, bolstering Berkshire’s extensive investment portfolio. In addition to its Chubb investment, Berkshire also holds stakes in other insurance-related businesses such as Aon (NYSE:AON) (AON) and has previously invested in Marsh & McLennan (MMC).
Market Overview: -Warren Buffett's Berkshire finally revealed its long-awaited "mystery investment," a $6.7 billion stake in leading insurer Chubb. This disclosure ends months of speculation about Berkshire's significant new holding.
Key Points: -Berkshire had secretly accumulated this stake since 2023 with SEC permission to delay public disclosure. -The conglomerate is known for building large positions confidentially to avoid influencing stock prices during the buying process. -Chubb's stock surged in after-hours trading, reflecting investor confidence in Buffett's pick.
Looking Ahead: -This move strengthens Berkshire's presence in the insurance industry, complementing its existing insurance holdings like Geico and National Indemnity. -Chubb's global reach and diverse risk coverage align with Berkshire's strategy of generating long-term "float" for further investments. -The sizeable cash pile at Berkshire suggests potential for further acquisitions in the future.
Chubb, one of the largest property-casualty insurers in the U.S., operates in 54 countries and covers a diverse array of risks, including cyber-attacks and marine shipping. The company recently made headlines with its $350 million payout related to the Francis Scott Key Bridge collapse in Baltimore. Under the leadership of CEO Evan Greenberg, Chubb has grown significantly since the 2016 merger of and Chubb. Greenberg, the son of former AIG (NYSE:AIG) head Maurice “Hank” Greenberg, has steered the company towards becoming a formidable player in the global insurance market.
The disclosure of this investment comes shortly after Berkshire’s annual meeting in Omaha, where Buffett discussed other changes in Berkshire’s portfolio, including a trimmed stake in Apple (NASDAQ:AAPL) (AAPL), now valued at $135.4 billion. Despite reducing its position, Apple remains Berkshire’s largest investment. At the same meeting, Buffett hinted at the possibility of Berkshire's cash pile reaching $200 billion by the end of this quarter, highlighting the conglomerate's robust financial health and strategic investment acumen.
This article was originally published on Quiver Quantitative