Warren Buffett buys $4.1bn TSMC shares in Q3

In today’s top stories, hedge funds disclose stakes in TSMC, analysts speculate whether the S&P 500 could reach 4,200–4,300 and Ant Group raises $1.5bn for its consumer finance unit. Meanwhile, Morningstar reveals its stock picks for an inflationary environment and carmakers increasingly look to source minerals from miners directly.  

Buffett and Coleman buy TSMC

Warren Buffett bought more than $4.1bn ADR shares in Taiwan Semiconductor Manufacturing Company (TSMC) [TSM] in the third quarter. The latest 13F filings show Chase Coleman's Tiger Global acquired a $1.3bn stake in the chipmaker. The firm also boosted its Uber [UBER] position by purchasing $272m-worth of shares, but exited Xpeng [XPEV]. Berkshire Hathaway’s only exit was the real estate investment trust, Store Capital [STOR], while its position in Paramount Global [PARA] increased by 16%.

Ant Group to raise half of planned capital

The consumer lending unit of Ant Group, whose IPO was pulled back in November 2020 over regulatory concerns, is lining up more investors despite a major backer, China Cinda Asset Management pulling out. Ant Group is expected to raise around $1.5bn, half what it had originally been aiming for. Despite Jack Ma’s ongoing restructuring, the fintech company continues to face scrutiny from Beijing.

Morningstar’s “wide economic moat” picks

While some analysts believe that the S&P 500 is in a bear market rally, Morningstar’s chief US strategist, Dave Sekera, has told CNBC that investors are overthinking the inflation situation. “We actually think the US market is pretty undervalued here, trading at about a 15% to 20% discount to fair value,” said Sekera. He named six picks that have a “wide economic moat”, including Compass Minerals [CMP], Salesforce [CRM] and Amazon [AMZN].

Cyclical plays for the S&P 500 rally

Inflation is coming down and there are glimmers of hope that the Fed’s slowing rate hike will continue. “The S&P can continue to rally into the 4200-4300 range,” wrote 22V Research’s Dennis DeBusschere in research seen by Barron’s. The index closed on Monday 14 November at 3,957.25. If this plays out, investors can expect cyclical stocks like Caterpillar [CAT], PPG Industries [PPG] and Sherwin Williams [SHW] should outperform.

Carmakers source critical materials directly

Securing supplies of rare earth metals like lithium, cobalt and nickel has always been a challenge for carmakers, but now they are starting to source directly from miners. According to the Financial Times, Mercedes-Benz [MBG.DE] has signed deals promising to buy future output. Tanya Skilton, director of purchasing for electric vehicle critical materials at General Motors [GM], told the FT Mining Summit last month: “We’re absolutely convinced that this is a race, a zero-sum game and resources are a finite limit.”

Vodafone lowers full-year forecast

Telecoms giant Vodafone [VOD.L] announced that it was selling part of its majority stake in Vantage Towers [VTWR.DE] in a deal designed to boost connectivity in Europe. Soft performance in Germany weighed down Vodafone’s Q3 earnings on Tuesday. Full-year forecast has been revised with core earnings now expected to be between €15bn and €15.2bn, down from €15bn to €15.5bn. Free cash flow guidance has been trimmed from €5.3bn to €5.1bn.

Robotics profit slump

A weakening Chinese economy is leading to a slowdown in deployment of robots. Intuitive Surgical [ISRG] and Fanuc [6954.T] both reported a slump in profits in their most recent earnings. Despite this, robotic installations are expected to rise in the long-term. “Even in a difficult economic environment … we believe it is an interesting time to be thinking about these megatrends,” wrote Christopher Gannatti, global health of research at WisdomTree.