Warren Buffett Just Sold His Only Vanguard ETF and Piled Into a Stock Up Over 8,500% Since 1986

Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now

Bram Berkowitz, The Motley Fool

Thu, Feb 20, 2025, 1:50 AM 5 min read

Within 45 days of the end of each quarter, fund managers with over $100 million in assets under management must file a 13F with the Securities and Exchange Commission (SEC) disclosing what stocks they owned at the end of each quarter. Perhaps a nuisance for fund managers, these forms are closely monitored by retail investors who can't wait to see what the most experienced professional investors are buying and selling and get a glimpse into how some of the brightest investing minds in the world view the market. No 13F is more anticipated than the one from Warren Buffett's company, Berkshire Hathaway, which has a roughly $300 billion equities portfolio. In the fourth quarter, Berkshire sold its only Vanguard exchange-traded fund (ETF) and piled into a new stock up over 8,500% since its initial public offering.

Buffett has exited the broader market

Berkshire's 13F disclosed that that the large conglomerate completely exited its stake in the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the Vanguard S&P 500 ETF (NYSEMKT: VOO), two exchange-traded funds that track the broader S&P 500. For investors who have been following along, this is just the latest warning from Buffett and Berkshire about the state of the stock market.

Berkshire spent much of 2024 stockpiling cash and selling stocks, indicators that Buffett and Berkshire think the market is overvalued. The outright sales of the two broader market-linked ETFs further adds evidence that Buffett thinks the market has run too far too fast. Of course, Buffett is not alone. After more than two years of a bull market and the S&P 500 trading above 6,100 (as of Feb. 16), many investors and strategists believe the market is trading at an elevated valuation and are concerned to see a small group of high-flying tech and artificial intelligence (AI) stocks consuming so much of the S&P 500.

Now, the economy has held up far better than anyone could have imagined, especially after inflation ballooned roughly to 9% in 2022, prompting the Federal Reserve to implement over 530 basis points of interest rate hikes in a very short period of time, moves that have historically tipped the economy into a recession. Obviously, the market is operating in the gray after the Federal Reserve injected trillions of dollars following the onset of the pandemic, but Buffett has historically proved very effective in avoiding market downturns over many decades of investing, so investors should certainly be paying attention to the Oracle of Omaha's warning.

Buffett is taking the edge off with his next investment

Buffett and Berkshire's sole new position in the fourth quarter was Constellation Brands (NYSE: STZ), the international maker of beer, wine, and spirts. Berkshire added over 5.6 million shares in the fourth quarter. Constellation owns several popular alcoholic beverages including the beer brands Modelo Especial, Corona Extra, and Pacifico, as well as popular wines like Kim Crawford and Schrader and spirits like Casa Noble Tequila.

Constellation went public in 1973 and its stock has risen over 8,500% since July 1986, according to available pricing data from YCharts. Constellation hasn't exactly traded like a high-flying AI company recently, with the stock down over 33% in the last year and about 20% over the last five years. In Constellation's third fiscal quarter of 2025 for the three months ending Nov. 30, management lowered the company's full-year outlook due to weaker consumer demand and inventory destocking by U.S. retailers in its wine and spirits business. Alcohol companies could also face issues if Trump does eventually implement tariffs in Canada and Mexico and consumers have also shifted away from alcoholic beverages in some regards, as non-alcoholic beverages experience strong growth. While Constellation is investing in non-alcoholic beverages, this trend could be cutting into its main businesses.

Following the disappointing update about guidance, most analysts trimmed their price targets for Constellation. Still, average price targets over the last three months suggest nearly 50% upside for the stock, according to TipRanks. RBC Capital analyst Nik Modi lowered his price target to $293 but maintained an Outperform rating and added the stock to his Top Ideas list. When Modi issued his research report in early February, he noted that the market at the time only valued the stock at 12 times fiscal 2026 earnings, implying zero revenue growth long-term. However, net sales in the first nine months of fiscal 2025 still posted nearly 3% revenue growth from the first nine months in fiscal 2024. Buffett and the Berkshire team clearly think investors sold the stock too early and likely see a solid company trading at a wonderful price.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $361,466!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,349!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $558,625!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 3, 2025

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.

Warren Buffett Just Sold His Only Vanguard ETF and Piled Into a Stock Up Over 8,500% Since 1986 was originally published by The Motley Fool

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info