3 stocks Warren Buffett is selling

Warren Buffett's forever-style investing approach has made him one of the planet's wealthiest people and the poster child of long-term investing. His tremendous success over the past 50 years suggests that investors ought to pay attention to what stocks he's buying, but it also suggests that they might want to focus even more on what stocks he's selling. Fortunately, Warren Buffett's Berkshire Hathaway(NYSE: BRK-B)(NYSE: BRK-A) files a 13F report with the SEC that shows what he's been selling, and according to the most recent filing, Suncor Energy(NYSE: SU), Wal-Mart Stores(NYSE: WMT), and Deere & Co.(NYSE: DE) have all fallen out of favor with the Oracle of Omaha.

Read on to learn more about these companies, why Warren Buffett might be selling shares, and whether or not you should follow his footsteps away from the stocks.


Image source: Suncor Energy.

Giving up on oil sands

Warren Buffett sold 7.7 million shares of Suncor Energy in the second quarter and in the third quarter, he unloaded the rest of his remaining 22.3 million shares.

His decision to sell shares in the large Canadian oil-sands player might have stemmed from increasing concern that global oil and gas prices would remain under pressure for the foreseeable future. Rising U.S. production has caused oil and gas prices to slump significantly in the past year, and that's taken a toll on companies like Suncor that make their money producing, refining, and marketing oil products. While the company earned over $4 billion a few years ago, its net loss totals $1.6 billion over the past 12 months:

SU Net Income (TTM) Chart

SU Net Income (TTM) data by YCharts.

Warren Buffett's decision could also have been influenced by Suncor's spending plans. In June, Suncor diluted investors with a 82.2 million share offering that raised $2.9 billion in capital. Suncor plans on using the money for acquisitions.

Ultimately, Suncor could swing back to a profit if oil and gas prices bounce back. Its M&A (mergers and acquisitions) plans could also pay off long-term. Nevertheless, uncertainty related to both of these factors appears to have convinced Buffett that it's better to wait and watch from the sidelines.

RELATED: Warren Buffett through the years:

Warren Buffett through the years
See Gallery
Warren Buffett through the years
Investor Warren Buffett answers reporters' questions during a press conference to announce that Walt Disney will buy Capital Cities/ABC July 31.
Billionaire investor Warren Buffett of Omaha makes a rare public appearance during an autograph session outside Borsheim's Jewelry Store in Omaha, May 4. Buffett was signing autographs for shareholders in his company, Berkshire Hathaway, which is having its annual meeting May 5.
Billionaire businessman Warren Buffett sits with his wife Susan (R) and daughter Susie, prior to the annual Berkshire Hathaway shareholders meeting in Omaha, May 5. This marks a rare public appearance for the reclusive Buffett.
Arnold Schwarzenegger, Republican candidate for governor of California in the October 7, 2003 recall election listens as world famous investor, Warren Buffett (L), one of his financial advisors, speaks to reporters after a meeting of Schwarzenegger's Economic Recovery Council in Los Angeles August 20, 2003. REUTERS/Fred Prouser FSP
Billionaire financier Warren Buffett looks on after a meeting with U.S. Senator Arlen Specter (R-PA) and chairman of the Senate Judiciary Committee, at the Hart Senate Office Building on Capitol Hill in Washington June 29, 2005. Specter is the co-author of a bill seeking to create a $140 billion asbestos compensation fund. REUTERS/Shaun Heasley SH/TC
Billionaire Warren Buffett arrives at the Sun Valley Resort in Sun Valley, Idaho July 10, 2007. The world's biggest media chiefs gather this week at the 25th annual Allen & Co. conference at the resort starting today. REUTERS/Rick Wilking (UNITED STATES)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at a Senate Finance Committee hearing about "Federal Estate Tax: Uncertainty in Planning Under the Current Law" on Capitol Hill in Washington, November 14, 2007. Billionaire Buffett warned of widening U.S. income disparity and endorsed the estate tax as a check on wealth accumulation, while two senior lawmakers said they want the tax repealed. REUTERS/Jason Reed (UNITED STATES)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett greets shareholders during the Berkshire Hathaway Annual Shareholders meeting in Omaha, Nebraska May 3, 2008. REUTERS/Carlos Barria (UNITED STATES)
Billionaire investor Warren Buffett laughs as he appears with Microsoft Corporation founder Bill Gates for a town hall style meeting with business students broadcast by financial television network CNBC at Columbia University in New York, November 12, 2009. REUTERS/Mike Segar (UNITED STATES BUSINESS)
Berkshire Hathaway Chairman Warren Buffett kisses his ukulele at the Berkshire Hathaway annual meeting in Omaha May 1, 2010. Buffett played "I've Been Working on the Railroad." REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS TRANSPORT)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett (L) and Microsoft founder Bill Gates gesture at the national launch ceremony for the BYD M6 vehicle in Beijing September 29, 2010. Chinese battery and car maker BYD, backed by Buffett, launched its first premium multi-purpose vehicle (MPV) in Beijing on Wednesday to tap rising demand in the world's biggest auto market. REUTERS/Jason Lee (CHINA - Tags: TRANSPORT BUSINESS)
Billionaire Warren Buffett, wearing a traditional tikka or a red mark on the forehead, speaks during a news conference in Bangalore March 22, 2011. Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could be a deterrent. Buffett also said and the U.S. economy was improving and that the devastating earthquake in Japan would not hurt global growth. REUTERS/Stringer (INDIA - Tags: BUSINESS)
Berkshire Hathaway Chairman Warren Buffett tours the floor of the New York Stock Exchange September 30, 2011. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)
Berkshire Hathaway chairman Warren Buffett holds his hand over his heart during the singing of the national anthem, at the start of a 5km race sponsored by Brooks Sports Inc., a Berkshire-owned company, in Omaha May 5, 2013, a day after the company's annual meeting. Buffett at the meeting on May 4, 2013 gave the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS SPORT ATHLETICS)
Warren Buffett, Chairman of the Board and CEO of Berkshire Hathaway, poses for a portrait in New York October 22, 2013. REUTERS/Carlo Allegri (UNITED STATES - Tags: BUSINESS)
Roberta Buffett Elliott sits with her brother Warren Buffett as they attend an announcement ceremony at Northwestern University in Evanston, Illinois, January 28, 2015. The sister of financial investor Warren Buffett has given Northwestern University more than $100 million to create the Roberta Buffett Institute for Global Studies, the largest single gift in the school's 164-year history, the university said on Wednesday. REUTERS/Jim Young (UNITED STATES - Tags: BUSINESS EDUCATION SOCIETY)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune's Most Powerful Women's Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo
Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles before speaking with Bill Gates (not pictured), at Columbia University in New York, U.S., January 27, 2017. REUTERS/Shannon Stapleton

Cooling off on competition

Wal-Mart has been a Warren Buffett holding for years, but he's soured on the stock this past year in the face of rising competition from online retail giant Amazon.com.

Berkshire Hathaway sold 4 million shares of Wal-Mart late last year, another 15 million shares in the second quarter, and an additional 27.3 million shares in the third quarter. The pace of Buffett's selling suggests to me that he plans to sell his remaining 12.9 million shares before the end of this year.

If that's the case, then it marks a seismic shift in his opinion of the company, which has been steadily losing wallet share to online retailers. In a bid to keep those competitors at bay, Wal-Mart has taken a hard line with suppliers lately that may indicate a profit-unfriendly price war is afoot. Now that we're bumping up on the ever-important holiday shopping season, Warren Buffett's selling doesn't add confidence that Wal-Mart can fend off its online rival anytime soon, and that could be reason enough for you to head for the exit too.


Image source: Deere & Co.

Plowing up less profit

Until recently, Warren Buffett had been increasing Berkshire Hathaway's exposure to Deere & Co. However, Warren Buffett used some of Deere's rally this past summer to pare back his stake in the farm-machinery Goliath.

Warren Buffett sold 874,185 shares in Deere & Co. in the third quarter, reducing his stake by 3.98% to 21.1 million shares. Despite the selling, Berkshire Hathaway remains Deere's biggest institutional investor, but that could change if Warren Buffett's outlook on grain prices and farm income shifts, due to the election of Donald Trump as America's next president.

Although Deere & Co. shares are up 22% this year, the company's profit has slumped substantially as farm income has declined to its lowest point since the Great Recession. Through the first nine months of the year, Deere & Co.'s $1.24 billion profit was considerably lower than the $1.59 billion profit it posted in the comparable period of 2015. Deere & Co.'s global equipment sales declined 14% year over year in Q3, suggesting that slowing machinery demand continues to drag on the bottom line.

So far, Warren Buffett has looked beyond this year's slide in demand and profit, toward rising global food demand driven by an increasingly larger population. Now that Trump's secured the White House, Deere's potential to tap into that opportunity might change. The company could benefit from rising infrastructure spending, but a strong dollar and a trade war with China, Mexico, and Canada could offset much, if not all, of that benefit.

Overall, it's anyone's guess how Warren Buffett will weigh these competing factors, so investors will want to keep close tabs on Berkshire Hathaway's 13F over the next couple quarters to see whether his selling accelerates.

Forget the 2016 Election: 10 stocks we like better than Wal-Mart Stores

Donald Trump was just elected president, and volatility is up. But here's why you should ignore the election:

Investing geniuses Tom and David Gardner have spent a long time beating the market no matter who's in the White House. In fact, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Wal-Mart Stores wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click hereto learn about these picks!

*Stock Advisor returns as ofNovember 7, 2016

Read Full Story