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Warren Buffett's Berkshire Hathaway buys stake in Restoration Hardware

RH is high-end furniture retailer

(CNN) - Warren Buffett must really like comfy sofas and beds. The Oracle of Omaha's Berkshire Hathaway bought more than 1.2 million shares of high-end furniture retailer RH -- aka Restoration Hardware -- in the third quarter. It's a new position for Berkshire.

Shares of RH surged nearly 6% Friday morning on the news, adding to the stock's already sizable gains this year. RH is now up more than 50% in 2019.

The investment makes sense considering that Berkshire Hathaway also owns the Nebraska Furniture Mart, RC Willey Home Furnishings, Jordan's Furniture and Star Furniture retail chains. So it's clear that Buffett is a fan of the home furnishings business.

According to trade publication Furniture Today, Berkshire's furniture unit is the seventh-largest in the United States, with estimated sales of $2.1 billion in 2018. RH is a bit bigger, generating sales of $2.5 billion last year.

RH is also decidedly more luxe than many of Berkshire's furnishing subsidiaries. The RH website features links to Ski House and Beach House collections as well as requests for a consultation with the company's in-house interior design team.

But RH wasn't the only newbie in Berkshire's portfolio. The company also bought a nearly 7.5 million share stake in oil giant Occidental Petroleum. Berkshire had provided financing to Occidental for its takeover for rival Anadarko last year. Occidental outbid Chevron. Occidental rose more than 3% Friday.

Billionaire Carl Icahn, who also owns a stake in Occidental, has criticized that company's management team for spending so much on Anadarko -- especially since Oxy cut a deal with Buffett that was very advantageous for Berkshire.

Berkshire Hathaway also trimmed some of its positions in a few of its top holdings. It sold shares in Apple, although the iPhone maker remains Berkshire's largest investment. Berkshire also sold a piece of its stake in troubled bank Wells Fargo.

But Berkshire didn't touch most of its other large positions, such as Coca-Cola, American Express and Bank of America. In fact, Berkshire recently applied to the Federal Reserve for approval to boost its ownership stake in BofA above the legal threshold of 10%. Berkshire issued a similar application to the Fed regarding its Wells Fargo position but dropped the request in 2017.

Berkshire also didn't do anything with its massive stake in struggling food conglomerate Kraft Heinz. That stock tumbled Thursday after Goldman Sachs -- which Berkshire also owns a stake in -- downgraded Kraft Heinz to a sell.


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