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How Buffett, Others Scored $80 Billion In Five-Day Stock Sell-Off

It’s been a tough five days for most S&P 500 investors. But some fleet-footed traders are finding gains in rising S&P 500 sectors and stocks amid the sell-off.




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Nearly 80 of the stocks in the S&P 500 are up since the S&P 500 peaked on July 12 and started its 2.9% descent. Led by big gains in mostly consumer staples like Warren Buffett favorite Kroger (KR) and Clorox (CLX) plus utilities like Eversource Energy (ES), investors holding stocks rallying in the downturn are up nearly $80 billion, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

Meanwhile, the entire stock market is down 3.3% for a paper loss of $1.6 trillion in the past five days, says Wilshire Associates. Investors lost $675 billion on Monday alone. Many S&P 500 investors unloaded stocks, fearing yet another Covid-19 outbreak. The market’s losing streak is the longest since a five-day losing leg ended on Oct. 19, 2020, Wilshire says.

So what S&P 500 stock are dodging the pain?

S&P 500 Sectors That Rule In Five-Day Sell-Off

Investors are definitely running for the defense. Only two S&P 500 sectors are up in the past five days, and both are havens for investors playing it safe.

The Consumer Staples Select Sector SPDR ETF (XLP) is up 1.1% in the past five days. And the Utilities Select Sector SPDR ETF (XLU) is up 0.7%. And nine of the 10 top S&P 500 stocks in the past five days are in one of those two sectors.

Worries about more economic shutdowns triggered by a new variant of the Covid-19 virus is prompting investors to reconsider their bullishness on the economy. S&P 500 investors are hunkering down again. The Energy Select Sector SPDR ETF (XLE), the top S&P 500 sector all year, plunged 11% in the five-day sell-off.

Investors Hide Out In These S&P 500 Stocks

Nearly 80 S&P 500 stocks are up in the past five days. But it’s a matter of degree.

Only a dozen of the S&P 500 stocks up in this recent sell-off rose 2.5% or more. And only four are up 4% or more. More than 30 are only up less than 1%.

What’s the sell-off winner in the S&P 500? A newly favorite Warren Buffett stock, grocery chain Kroger. Shares of the seller of food and other necessities jumped more than 7% since the S&P 500 peaked on July 12. That put more than $2 billion into the pockets of investors, while most everyone else is losing. Impressively, shares of Kroger are up nearly 30% already this year.

Buffett’s Berkshire Hathaway now owns 17.5 million shares of the company. It’s Berkshire Hathaway’s 18th largest U.S.-listed holding now. But that’s up from nothing last March.

The company is expected to report second-quarter profit of $484 million, or 63 cents a share, for the July quarter. If that’s right, profit will be down more than 13% from the same year-ago period. Profit this fiscal year is expected to drop nearly 12%. Buffett’s Berkshire Hathaway (BRKB) is Kroger’s third-largest shareholder, with 6.8% of the company.

Not Just S&P 500 Staples Are Working

If people retreat to their homes a little longer, they’re not going to just shop for groceries. They’ll need to keep their houses running, too.

And that explains S&P 500 investors’ run into Eversource Energy, a Springfield, Mass.-based provider of electric and natural gas. Shares jumped 4.5% in the past five days. Like most utilities, Eversource isn’t a fast grower. Profit is seen adding only 5.5% this fiscal year. But with a dividend yield of 2.8%, or double that of the S&P 500, you at least get paid to wait out the sell-off.

Looks like S&P 500 investors want to hide out just a little longer, until they know it’s safe to stay out in riskier sectors.

Biggest S&P 500 Gainers Since July 12 Peak

Company Ticker Dollar gain from July 12 high (in millions)* Stock % change from July 12 high Sector
Kroger (KR) $2,064 7.2% Consumer Staples
Eversource Energy (ES) 1,281 4.5 Utilities
Clorox (CLX) 1,000 4.4 Consumer Staples
PepsiCo (PEP) 8,766 4.2 Consumer Staples
Evergy (EVRG) 507 3.6 Utilities
Kimberly-Clark (KMB) 1,464 3.2 Consumer Staples
J. M. Smucker (SJM) 389 2.8 Consumer Staples
Hormel Foods (HRL) 688 2.7 Consumer Staples
American Water Works (AWK) 795 2.7 Utilities
Rollins (ROL) 448 2.6 Industrials
Sources: IBD, S&P Global Market Intelligence, day of S&P 500 high
Follow Matt Krantz on Twitter @mattkrantz

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