Warren Buffett, the legendary investor, recently disclosed his secret stock pick in a regulatory filing, and it’s none other than insurer Chubb. Berkshire Hathaway, Buffett’s conglomerate, acquired nearly 26 million shares of Chubb, amounting to a stake worth $6.7 billion. This move catapulted Chubb to become Berkshire’s ninth largest holding by the end of March.
While the news of Berkshire’s stake sent Chubb’s shares soaring by almost 7% in extended trading, the stock has already gained around 12% year to date. It’s interesting to note that the original Chubb was acquired by Ace Limited in 2016 for a hefty sum of $29.5 billion, leading to the adoption of the Chubb name by the combined entity. Evan Greenberg, the current CEO of Chubb, is the son of Maurice Greenberg, the former chairman and CEO of insurance giant American International Group.
Berkshire Hathaway, based in Omaha, has a significant presence in the insurance sector, boasting a diverse portfolio ranging from auto insurer Geico to reinsurance behemoth General Re. The conglomerate also expanded its footprint by acquiring Alleghany, another insurance company, for a substantial amount of $11.6 billion in 2022.
Interestingly, Berkshire recently divested its positions in Markel and Globe Life within the same industry. This strategic move reflects Buffett’s ongoing efforts to fine-tune the conglomerate’s investment portfolio and capitalize on emerging opportunities in the market.
The mystery surrounding Berkshire’s undisclosed purchase had piqued the curiosity of many investors for several quarters. The conglomerate had requested confidential treatment to keep details of its stock holdings under wraps, leading to speculation about the nature of the mystery holding. While some anticipated a bank stock, based on the surge in Berkshire’s equity holdings in the banking and finance sector, the reveal of Chubb as the secret pick came as a surprise.
It’s worth noting that Berkshire’s decision to keep this purchase confidential showcases its strategic approach to investing and its ability to uncover undervalued opportunities in the market. This level of discretion is relatively rare for Berkshire, with the last instance being the acquisition of Chevron and Verizon in 2020.
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