Most people, even the most diligent and active investors, are bored silly by regulatory filings. One of the rare exceptions is the 13F forms submitted by Warren Buffett's Berkshire Hathaway. These documents always make for compelling reading, as they itemize the holdings in Berkshire's considerable equity portfolio, and therefore serve as a way to track its additions and disposals.
One piece of information included in Berkshire's latest 13F -- released in mid-November -- was its complete exit from highly specialized retail stock Floor & Decor Holdings (NYSE: FND). Here are two important things worth keeping in mind about that company, and Berkshire's investment in it.
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One of the reasons Buffett is such a legendary figure in the investing world is that he can be a very, very long-term player. One of his most quoted utterances about Berkshire is, "Our favorite holding period is forever," and the company has put its money where its mouth is more than a few times. Current portfolio occupant American Express, for example, has been a Buffett stock since 1964.
Floor & Decor wasn't a forever holding; it didn't even last half a decade. Berkshire first bought into it in the third calendar quarter of 2021 with a buy-in of slightly over 817,000 shares. Over the next two quarters Buffett and the gang added a bit over 30,000 shares, but these were the last of the buys. The sell-off started in the second quarter of this year, and by the end of the following frame the Floor & Decor position was completely vacated.
This is illustrative of one aspect of Buffett's investing strategy that has helped bring him great success -- he is not sentimental about stocks. Many of us have been guilty of hanging on to a tumbling equity simply because we like the business, we're fond of management, we enjoy the products, etc. Berkshire, though it favors super long-term holdings, isn't shy to unload positions when a once-liked stock's future starts to look cloudy.
With a stalling housing market and a customer base spooked by inflation, Floor & Decor was posting notable declines in same-store sales across 2024. A fundamental investor to his core, Buffett might have felt that that dynamic alone was reason enough to exit the stock.
The previous 13F filing, (i.e. the final one including the now-departed Floor & Decor stake), revealed that Berkshire held just under 4 million shares of the retailer. The listed market value of the holding was a bit over $395 million, which to you or me is a staggering amount of capital.