The Motley Fool

Warren Buffett Is Getting Rid of Canadian Stocks

Image source: Getty Images

Billionaire investor Warren Buffett made the headlines again when Berkshire Hathaway completed its latest 13F filing. It revealed that Buffett has sold his entire stake in Restaurant Brands International (TSX:QSR)(NYSE:QSR) and retained Suncor Energy (TSX:SU)(NYSE:SU).

As a Canadian investor, you might be wondering whether it is a sell signal for all Canadians to get rid of RBI. Should you hold onto the restaurant industry giant?

Confusing sale

RBI is the owner and operator of three of the world’s biggest fast-food chains, namely, Tim Hortons, Burger King, and Popeyes Louisiana Kitchen. When Warren Buffett exits his position in a company, it can send the stock reeling, as investors follow suit and sell their shares. In the case of Restaurant Brands International, nothing like that happened.

Buffett’s exit did not rattle RBI investors. Another billionaire investor Bill Ackman, the owner of Pershing Square Holdings, made a move to contradict the Oracle of Omaha. He reallocated his portfolio to remove Berkshire Hathaway and retained Restaurant Brands International.

Buffett’s sale of RBI is confusing because the company has already reopened most of its locations. It also offset the loss of its dine-in sales by boosting its drive-thru and digital sales operations.

Questionable acquisition

Another questionable move revealed by the 13F filing was the additional acquisition of Suncor shares. Canada’s energy infrastructure giant and oil sands king saw Warren Buffett purchase additional shares. As of June 30, 2020, Berkshire holds 19.94 million shares of the company compared to 14.94 million shares by the end of March 2020.

Suncor increased its dividends by 10.7% in February 2020 to post a record 18th consecutive year of dividend growth. However, the onset of COVID-19 and the oil price crisis saw the company slash its dividends by 55%.

Buffett chose to remain invested in the company despite its weakened short-term liquidity. Additionally, Buffett also made the surprising move to bet on gold and gold mining stocks by investing in Barrick Gold.

The gold and copper mining industry has been on a roll for the last few years. It has managed to significantly reduce its debt amid the increasing market volatility that fueled gold prices. Buffett’s Berkshire purchased 20.92 million shares of the gold and copper mining company to create a massive safety net within the TSX by betting on gold.

Foolish takeaway

If you were wondering whether exiting RBI is a sign that Buffett is saying that you should sell Canadian companies, I think that is not the case. If Buffett were exiting Canada entirely, he would also sell his stake in Suncor, and he would not purchase another Canadian company.

It is possible that he sold RBI, because he anticipates another market crash that could devastate companies like RBI. However, he has not explicitly stated why he sold the Canadian restaurant giant. Whether you choose to remain invested in RBI or sell your shares in the company is up to you. I think it could be a worthwhile investment for its incredible recovery during the pandemic.

Speaking of stocks that a billionaire investor has been investing in…

Looking for the Next Potential Netflix? We’ve Got You Covered with These 3 Free Stock Picks

Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.

Click Here to Get Your Free Report Today!

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.