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Hi Reader, here's what you need to know for February 18th in 3:06 minutes.

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Today's big stories

Warren Buffett’s Berkshire Hathaway recently sold off some of its Apple stock and secretly bought into three new companies
There are 35 companies that look particularly cheap next to the rest of the market’s sky-high stocks – Read Now
World’s second biggest mining company Rio Tinto posted better-than-expected earnings after prices of metals surged

The Usual Suspect

What’s Going On Here?

Looks like Buffett’s been up to his old tricks: a filing released by Berkshire Hathaway late on Tuesday revealed it’s sold off some of its Apple stock and quietly bought into three other companies.

What Does This Mean?

Investors don’t usually find out what the Buffett-run investment firm has been buying and selling until its quarterly updates, so this one-off filing might’ve caught investors off guard – especially because it was selling off some of its stake in Apple and holding on to “just” $120 billion worth of the tech giant’s shares. But Berkshire didn’t just trim back there: it recently sold stakes in JPMorgan Chase and Wells Fargo too. And since that freed up some loose change, the conglomerate bought into telecom giant Verizon, insurance broker Marsh & McLennan, and bruised oil major Chevron instead.

Why Should I Care?

For markets: When Buffett talks, investors listen.
Berkshire Hathaway is a global bellwether for investors: where Buffett’s team boldly goes, other investors follow. So it might come as little surprise that Verizon, Marsh & McLennan, and Chevron’s shares initially rose on Wednesday, while Apple, JPMorgan, and Wells Fargo’s fell. Investors might’ve seen that coming, though: data from TipRanks shows investor sentiment had recently turned “very negative” on the three stocks Berkshire sold.

For you personally: Portfolio rebalancing in practice.
There’s a lesson in Berkshire’s latest update too: the importance of rebalancing your portfolio. See, banks have done well in the last few months, and Apple – which is the investment firm’s single biggest investment – has even seen its value triple since Berkshire last sold some of its stake back in 2019 (tweet this). By selling those stocks, then, Buffett’s business locked in some profits and made sure no single industry or company sways its portfolio too much.

You might also like: How to use Buffett’s investing strategies for yourself.

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2. Analyst Take

Where To Find The Market’s Best-Priced Gems

What’s Going On Here?

No matter which way you turn, stock markets are eye-wateringly expensive.

But there are still opportunities out there if you know where to look.

Big companies with a high free cash flow yield and consistent earnings growth, for example, look attractive right now – especially those that analysts are overwhelmingly positive toward.

And a detailed stock screen turned up 35 companies that fit the bill, mostly in often-ignored sectors like banks, healthcare insurance, and retail.

That’s the focus of today’s Insight: the companies we think might be underpriced, and the catalyst that’ll give these companies’ shares a boost.

Read or listen to the Insight here

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Iron Maiden

What’s Going On Here?

Rio Tinto was born to (extract ore from) rock: the world’s second-biggest mining company announced better-than-expected earnings on Wednesday.

What Does This Mean?

Rio’s done well out of China’s rapid post-pandemic recovery: the price of the company’s most important commodity – iron ore – jumped almost 85% last year on the back of strong demand from China’s massive steel-making industry. That led Rio to announce a higher-than-expected profit, not to mention the biggest dividend payout in its 148-year history.

Never one to rest on its laurels, Rio will be spending more on new green technologies too – specifically those that lower the emissions its customers generate when they process its raw materials. And since steelmakers single-handedly account for 7% of direct fossil fuel emissions, that could be a big step forward for the industry.

Why Should I Care?

For markets: Miners aren’t making mistakes of the past.
The world’s biggest miner impressed earlier this week too: BHP released a strong earnings update and handed out a bumper payout of its own. Both miners’ dividend announcements will come as a relief to their shareholders, who might’ve been nervous they’d use the money to buy lower quality mines just to get their hands on more ore. That’s what they did at the peak of the last commodity cycle a decade ago, and it all ended in tears when prices came crashing down.

The bigger picture: You are now entering a commodities supercycle.
JPMorgan and Goldman Sachs reckon this is actually the start of a years-long “supercycle” of commodities gains – for only the fifth time in history, no less. An economic recovery and the green revolution should, they reckon, drive a lot of commodity-dependent infrastructure investments. And given there’s a limited supply to meet this rising demand, that should push prices higher for longer. Hedge funds, for their part, seem to agree: they’ve already allocated more money to commodities than they have in a decade.

You might also like: How you can profit from surging commodity prices.

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💬 Quote of the day

“I always wanted to be somebody, but I should have been more specific.”

– Jane Wagner (an American writer, director, and producer)

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🤔 Q&A · RE: Food, Not-So-Glorious Food

“What is a stock market correction, and why are investors concerned about it?”

– Elleisha

“A correction is when the price of an asset – including an individual stock or index – falls by 10-20% from its most recent peak. That could cause investors to lose up to a fifth of their investments, which is why they’re so inclined to worry about one. So to protect their portfolios against that risk, they might ‘hedge’ by buying assets that’ll likely rise if others fall, offsetting any potential losses.”

🙋 Ask a question

🌴 Finimize Community

🌱 Every blade of grass makes a difference

Reusable bags are great and all, but green investment’s kind of where it’s at. That’s why, next Tuesday, KPMG’s Joshua Hasdell will be giving you all the tools you need to profit from climate-friendly investments. He’s a TedX speaker, don’t you know.

🎮 The Boom in eSports ETFs: 6pm UK Time, February 22nd
♻️ The Path to Carbon Neutrality: 6pm UK Time, February 23rd
🚀 Unstoppable Investing Trends: 6.30pm UK Time, February 24th
🤔 How to Diversify your Portfolio: 6pm India Time, February 24th
🌱 The Science Of Sustainable Investing: 4pm UK Time, February 25th
🙋 Investing in Women: 6pm UK Time, February 25th
🌈 Financial Planning for the LGBTQ Community: 2pm New York Time, February 26th
💪 Q&A with Finimize CEO, Max Rofagha: 1.30pm UK Time, February 26th
🔥 The Easy-Does-It Wealth-Building Strategy: 7pm Singapore Time, February 26th
💥 The 2020s: Boom Or Bust?: 1pm UK Time, March 2nd
💪 The Power Of Thematic Investing: 6pm UK Time, March 2nd
🌍 Investing In Biodiversity: 6pm UK Time, March 3rd

📚 What we're reading

Why young people are ditching the city (The Guardian)
IKEA’s going sustainable (HuffPost)
Stan Lee isn’t the hero he’s made out to be (Slate)

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Finimize - 🤭 Buffett ditches Apple

Today's big stories

The Usual Suspect

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Where To Find The Market’s Best-Priced Gems

Drone on and on and on

Iron Maiden

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Sort the best from the rest

🌱 Every blade of grass makes a difference

Older messages

🤫 Palantir's in for a bumpy ride

😷 Investors bet on coronavirus

🤘 No Disney show left unwatched

📈 This stock market is weird

💪 Hedge funds pick their top stocks

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