It was absolutely a day to forget for stock market participants, as the S&P 500 took one of its worst hammerings in recent memory.
The bears are still clawing in the post-market trading hours, with some companies getting hit with notable declines -- even though this evening's news isn't bad for every stock.
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Buffett goes shopping, buys Amazon
Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B), Warren Buffett's corporate vehicle, revealed the latest moves in its publicly traded stock portfolio. Its regular quarterly regulatory disclosure that details such moves was filed after market close today.
That filing reveals that the legendary investor's company loaded up on shares of Amazon.com (NASDAQ: AMZN). Berkshire's Amazon stake amounted to 537,300 shares as of the end of calendar Q2. This represents an increase of 11% over the figure stated in the previous quarterly disclosure.
Amazon is a relatively new stock for Berkshire -- it revealed that it opened a position in it in May. Amazon as an investment represents a departure for the once famously tech-averse Buffett, although he has publicly expressed admiration for the company numerous times in the past.
As ever, though, Berkshire remains heavily weighted in the finance sector, a classic Buffett favorite. According to the latest portfolio disclosure, Berkshire increased its already-considerable Bank of America stake by 3.5%, while its position in US Bancorp was lifted 2.4% higher.
As with Amazon, Bank of America hasn't been a decades-long hold for Berkshire. This began as more of an opportunistic involvement, when Buffett in 2011 agreed to invest $5 billion of Berkshire's capital in return for a pile of preferred stock and warrants. After exercising those warrants in 2017, the value of that Bank of America stake had grown to roughly $21 billion.
Separately, Pershing Square Capital -- headed by one of the most prominent activist investors, Bill Ackman -- revealed in a regulatory filing of its own that it has opened a position in Berkshire. Pershing Square purchased around 3.5 million shares of Berkshire's Class B shares for a stake worth approximately $685 million.
Both classes of Berkshire stock are trading more or less flat tonight, as is Amazon and the two mentioned banks.
Cisco Q4: Slight beats, weak guidance
We can't say the same for Cisco (NASDAQ: CSCO) stock, which is off by almost 8%. It's not hard to figure out why -- the networking equipment giant posted its Q4 of fiscal 2019 results after hours, and they're not making investors happy.
For the quarter, Cisco took in revenue of $13.43 billion and netted a non-GAAP (adjusted) profit of $3.6 billion ($0.83 per share). Those numbers were higher than those of Q4 2018, which came in at $12.8 billion and $3.3 billion ($0.70), respectively. This despite fallout from the China-U.S. trade war, which has significantly affected the company -- its China revenue was down a steep 25% year over year.
Cisco's Q4 2019 headline numbers narrowly beat the average analyst estimates. Collectively, the prognosticators who follow the stock were expecting $13.38 billion on the top line, with adjusted per-share net earnings of $0.82.
The slight beats probably aren't what is driving the stock's sell-off tonight, though. This is more likely attributable to Cisco's guidance for its Q1 of fiscal 2020. The company is estimating that its revenue will be flat to 2% higher on a year-over-year basis, while its adjusted earnings per share should amount to $0.80 to $0.82. Both ranges are slightly under the average analyst estimates of 2.5% revenue growth and $0.83 for per-share earnings.
It seems as if Cisco is being punished for not excessively beating estimates, coming in slightly under projections for its current quarter, or perhaps both. This feels unwarranted, as the company is still managing to grow despite its size and the great challenges of the key China market just now. And unusually for a tech stock, Cisco pays a decent-sized dividend on a regular basis.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Berkshire Hathaway (B shares). The Motley Fool has the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
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