News – UK – Warren Buffett: Why Did He Sell His Gold Stocks?


Adam Othman | 23 February 2021 | More about: BRK-A BRK-B GOLD ABX

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) recently filed its 13F form with the Securities and Exchange Commission (SEC) and made some key revelations about Oracle of Omaha investment decisions.One of the most interesting moves was that Buffett decided to leave his position in Barrick Gold (TSX: ABX) (NYSE: GOLD) in the quarter that ended December 2020

By the end of the previous quarter, Buffett’s Berkshire Hathaway held roughly 12 million shares in Canadian gold and copper mining company News that Buffett had left the company sparked a massive sell-off, Barrick Gold’s valuation on the TSX fell 542 % between 16 and 18 February 2021

Let’s take a closer look at Barrick Gold’s performance, outlook, and why Buffett dumped his entire stake in the gold company

Barrick Gold reported adjusted earnings of $ 115 per share last year – more than double its adjusted earnings in 2019.The company used those numbers to just beat analysts’ expectations Barrick Gold made it to its own too To meet gold production forecasts with its stable operating performance through 2020

The higher gold and copper prices also boosted the company’s profits, ending 2020 with an Adjusted EBITDA of 59% compared to 50% in 2019. Revenue for 2020 also rose 30% to $ 12 billion – mainly due to the higher gold prices

The company’s better-than-expected performance in the final quarter of 2020 and total return for the year didn’t prevent the stock’s price decline after it was revealed that Buffett had left the company

The economic fallout from COVID-19 increased gold prices and increased profit margins However, the pandemic also affected some of Barrick Gold’s businesses and increased operating costs The company’s 2020 results were impressive despite the problems with COVID-19, but the production forecasts did not make a good impression on investors

Barrick Gold expects its gold production to remain between 4.4 to 47 million ounces in 2021, lower than the 476 million ounces it produced last year The company expects copper production to remain between 410 and 460 million pounds compared to £ 457 million in 2020

With gold prices falling in a recovering economy, Barrick’s expectation that operating costs will remain high suggests dire prospects for the gold producer this year

Buffett has never been a fan of Bitcoin or the rare yellow metal, so Berkshire’s investment in Barrick Gold was a surprise in and of itself, but Buffett didn’t buy gold instead, instead investing in a company that derives most of his sales from Gold Production Continues Berkshire’s decision to invest in the company was likely based on capitalizing on the company’s performance, and that is exactly what happened

A rally in gold and copper prices can increase the company’s profitability Conversely, falling prices decrease profit margins After the all-time high in August 2020, gold prices have fallen Experts predict that the price of gold will continue to decline in 2021 if the World economy recovers

Buffett decided to sell GOLD shares as the pandemic could wear off soon, which made it an understandable decision that it may not be the best time to start investing in gold or gold-related assets like Barrick Gold as you might be considering value opportunities found in other sectors where stocks can rise in the recovering market

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Fool player Adam Othman has no position in any of the stocks mentioned The Motley Fool owns shares of, recommends Berkshire Hathaway (B shares) and recommends the following options: Short January 2023 $ 200 bet on Berkshire Hathaway (B shares) , Short March 2021 $ 225 calls on Berkshire Hathaway (B shares) and long January 2023 $ 200 calls on Berkshire Hathaway (B shares)

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News – UK – Warren Buffett: Why Did He Sell His Gold Stocks?