Warren Buffett keeps selling billions worth of stock in this frothy

Bloated valuations in today’s stock market aren’t exactly appealing to value investors. So it’s no surprise that the most famous value investor of all continues to reduce his stock market exposure.

In Q3, Warren Buffett’s holding company Berkshire Hathaway sold a net $2 billion stock, including a complete exit of pharmaceutical giant Merck as well as pared stakes in Mastercard and Visa.

That said, Berkshire continues to have a huge portfolio, holding multibillion-dollar positions in companies like Apple, Bank of America, and American Express.

And while bargains are hard to find, the legendary investor did make a few purchases in Q3.

Here’s a look at three of them — one might be worth owning with some extra pennies.

Chevron (CVX)

Energy stocks have turned out to be big winners amid the oil price boom in recent months, and Buffett expects the fun to continue.

Berkshire already held a significant stake in Chevron heading into Q3, but Buffett boosted its stake in the oil supermajor by 24% during the quarter, adding 5.6 million shares.

As of Sept.30, Berkshire owned 28.7 million shares of Chevron, worth approximately $3.3 billion at today’s prices.

Like its peers, Chevron is firing on all cylinders. Revenue jumped more than 80% year over year to $44.7 billion in Q3. Adjusted earnings came in at $2.96 per share for the quarter, a huge improvement from the year-ago period.

“Third-quarter earnings were the highest since first quarter 2013 largely due to improved market conditions, strong operational performance, and a lower cost structure,” said Chevron Chairman and CEO Mike Wirth.

Chevron shares are already up more than 30% in 2021 and now trade at over $110 a piece.

But you don’t have to start big. These days, you can build your own energy portfolio just by using some digital nickels and dimes.

Royalty Pharma (RPRX)

Berkshire completely exited Merck in Q3, but that doesn’t mean it’s completely bearish on healthcare.

During the quarter, Buffett’s company backed up the truck on a drug royalty company called Royalty Pharma, buying 13.1 million shares.

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Berkshire’s stake in the company is worth roughly $552 million at current prices.

Royalty Pharma is not a pharmaceutical company in the traditional sense. It doesn’t develop drugs on its own. Instead, the company buys biopharmaceutical royalties and funds clinical trials and new product launches in exchange for future royalties.

In the most recent quarter, Royalty Pharma’s adjusted cash receipts totaled $587 million, representing a 24% increase year over year. Meanwhile, adjusted cash flow rose 12% to $441 million, marking its sixth consecutive quarter of double-digit growth.

Management also raised their full-year 2021 guidance, now expecting adjusted cash receipts in the range of $2.11 billion…