Buffett’s Berkshire Divests Shares In Liberty Global, Axalta Coating

Billionaire Warren Buffett’s Berkshire Hathaway disclosed that the investment conglomerate sold off shares in Liberty Global and Axalta Coating Systems.

According to a SEC filing, Berkshire on Sept. 4 divested 1.3 million in Class A Liberty Global (LBTYA) for $29 million, at an average price per share of $22.31 each. Liberty’s Class A shares have dropped 4.2% over the past five days and are down 22% over the past year, trading at $21.58 as of Friday’s close.

Following the sale, Berkshire (BRK.A) now owns 18 million Class A shares of the UK-based cable company.

Shares in Axalta Coating (AXTA) declined 3.2% to $22.43 in Friday’s after-market trading session after a separate filing showed that Berkshire sold 534,959 of the company’s stock on Sept. 9 for about $12 million, at an average price of $22.63. Following the sale, the investment conglomerate still owns 23,535,041 of Axalta shares.

AXTA has plunged 24% so far this year, but analysts have a Strong Buy consensus on the stock based on 7 Buys versus 2 Holds. That’s with an average analyst price target of $26.44, which implies 14% upside potential lies ahead over the coming year.  

Credit Suisse analyst Chris Parkinson earlier this month reiterated a Buy rating on the stock with a $28 price target after hosting several investor meetings with Axalta senior executives.

“Recent investor conversations suggest a desire to become “more bullish” given AXTA’s cost focus, sound liquidity position and gradually improving end markets, but some are still wary on the exact cadence of macro support (miles driven, auto recovery vs. ’19 builds, etc.),” Parkinson wrote in a note to investors. “Our sense is the key concern is becoming “stuck” in a temporary value trap, but we argue consistent execution vs. lower expectations, a sound competitive positioning (Refinish, Auto OEM, etc.), new EM growth opportunities (China, EE, etc.), the eventual return of capital allocation optionality (share buybacks, M&A, etc.), and end-markets “inching” in the right direction (sequential basis) drive our belief the stock will continue to edge higher.”

Parkinson added that the key take from the recent meetings is that AXTA is taking a prudent approach ahead of a COVID-19 recovery but is positioning itself post-pandemic to emerge as a better company in terms of incremental margins. The analyst sees potential for structural benefits from interim cost programs, cash conversion, to eventually further build out a top tier global industrial platform. (See AXTA stock analysis on TipRanks)

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