Reuters
- The “Buffett Effect” lifted AbbVie, Merck, Bristol Myers Squibb, and Pfizer shares on Tuesday.
- The four pharmaceutical stocks jumped after Warren Buffett’s Berkshire Hathaway revealed that it invested in them last quarter.
- The famed investor’s company disclosed stakes worth $1.8 billion to $1.9 billion in AbbVie, BMS, and Merck, as well as a $136 million Pfizer position.
- The four holdings were worth nearly $6 billion as of Monday’s close, up from $5.7 billion at the end of September, representing a $300 million gain for Berkshire.
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AbbVie, Merck, Bristol Myers Squibb, and Pfizer are the latest beneficiaries of the “Buffett Effect.”
The quartet of pharmaceutical stocks jumped in pre-market trading on Tuesday after Warren Buffett’s Berkshire Hathaway revealed on Monday that it invested in them last quarter. AbbVie, Merck, and Pfizer gained as much as 2%, and BMS rose as much as 3%, whereas benchmark S&P futures slid around 0.5%.
Buffett famously moves markets with his decisions, as many investors trust his judgment and copy his stock picks. Others anticipate that will happen and rush to buy the same stocks in order to profit from the “Buffett Effect,” making it a self-fulfilling prophecy to an extent.
The billionaire investor’s company bought about 21 million AbbVie shares, 30 million BMS shares, 22 million Merck shares, and 3.7 million Pfizer shares in the third quarter, it disclosed in a regulatory filing. Those holdings give it a 1.2% stake in AbbVie, a 1.3% stake in BMS, a 0.9% stake in Merck, and a 0.07% stake in Pfizer, assuming they haven’t changed since September 30.
The AbbVie, BMS, and Merck positions were each worth between $1.8 billion and $1.9 billion at the end of last quarter, while the smaller Pfizer position was worth $136 million. The four holdings were worth almost $6 billion in total as of Monday's close, up from $5.7 billion at the end of September, meaning Berkshire has already scored a $300 million gain on them.