This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway's US stock portfolio on a quarterly basis. It is based on Warren Buffett's regulatory 13F Form filed on 11/14/2012. Please visit our Tracking 10 Years Of Berkshire Hathaway's Investment Portfolio article series for an idea on how his holdings have progressed over the years and our previous update highlighting the moves during Q2 2012.
During Q3 2012 Berkshire's (BRK.A) (BRK.B) US long stock portfolio increased marginally from $74.3B to $75.3B. The total number of holdings increased from 37 to 38 this quarter. The new positions are Deere & Company (DE), Media General (MEG), Precision Castparts (PCP) and Wabco Holding (WBC). Combined, they account for less than 1% of the US long portfolio. Stake eliminations were CVS Caremark Corp. (CVS), Dollar General (DG), and Ingersoll-Rd (IR). This was a fairly active quarter with minor adjustments made to several positions along with a few big changes - only 16 of the 38 stocks in the portfolio remained steady this quarter. As with the last quarter, the largest five positions and their allocations remained steady. Combined, they account for around 75% of the overall portfolio value.
Deere & Company, Media General, Precision Castparts, Wabco Holdings: DE, MEG, PCP, and WBC are very small stakes established this quarter representing 0.44%, 0.03%, 0.27%, and 0.12% respectively of the US long portfolio. For MEG, the stake is significant as it represents around 17% of the outstanding shares. The rest of the positions are too minute to indicate a clear bias.
CVS Caremark Corp., Ingersoll-Rd: These are smaller positions that were reduced last quarter and were eliminated this quarter. The stake eliminations indicate a bearish bias. Buffett purchased the CVS stake in Q3 2011 when the price-per-share varied between $32.06 and $38.54. The stake was reduced by around 20% last quarter at prices between $43.25 and $46.73. The stake elimination this quarter occurred at prices between $44.12 and $48.61. Currently, the stock trades at around $45.41. IR was a long-term stake purchased in 2006 that was reduced by more than 90% last quarter before the elimination this quarter.
Dollar General: DG position was reduced by around 10% last quarter and was eliminated this quarter. The original position was built during Q2 2011 and Q3 2011 at prices between $30.40 and $38.07. The stake elimination this quarter happened at prices between $48.54 and $55.60. The stock currently trades at $47.18. The stake elimination this quarter indicates a bearish bias.
Bank of New York Mellon Corp (BK): BK is a 0.59% of the US stock portfolio stake that was more than tripled last quarter at prices between $19.51 and $24.67. The position was marginally increased this quarter at prices between $20.40 and $23.71. The stock currently trades at around $23.54. BK has been a minute presence in the portfolio since 2010. But, in the last three quarters, the position was increased substantially. Buffett is bullish on this stock and it is trading just within the price range Buffett could have bought it at. For investors attempting to follow Buffett, BK is a good option to consider.
DaVita Inc. (DVA): DVA is a 1.4% of the US stock portfolio position that was aggressively built-up over the last few quarters: the stake was doubled in Q1 2012 and was increased by over 50% last quarter. The position is still being built up as there was a marginal increase in the number of shares this quarter. The original position was purchased in Q4 2011 at prices between $60.64 and $76.81. The stake doubling in Q1 2012 happened at prices between $75.81 and $90.17. The stock traded between $80.23 and $98.21 last quarter and between $94.80 and $103.61 this quarter. It currently trades well outside that range at $112. The company is the dominant player in the dialysis business in the US and Buffett is very bullish on the stock.
International Business Machines (IBM): IBM is Buffett's third largest stake at around 18.59%. The position was increased by around 3.5% this quarter. The original stake was purchased in Q3 2011 at prices between $157.54 and $185.21. Since then, the position size has gone up by around 19% through purchases every quarter. This quarter, the position was marginally increased at prices between $183.05 and $207.45. The stock currently trades at around $185. Buffett is very bullish on IBM.
Wells Fargo & Co. (WFC): WFC is Buffet's second largest stake at around 19.37%. The position is being incrementally increased every quarter and the tradition continues with an over 2.8% increase this quarter. Buffett is very bullish on WFC.
DIRECTV (DTV) & Viacom (VIAB): DTV is a 2.06% position first purchased in Q3 2011. It has since been built-up over several quarters. The bulk of the position was purchased in Q4 2011 at prices between $40.60 and $47.87. The stock currently trades just outside that range at $48.24. VIAB was a minute ~0.1% of the US stock portfolio stake that was established Q1 2012 at prices between $45.41 and $49.38. It was increased by over 325% last quarter at prices between $45.66 and $49.02. This quarter, the position was marginally increased at prices between $45.28 and $55.20. The stock currently trades at around $48. Buffett has a clear bullish bias toward large media companies.
National Oilwell Varco Inc. (NOV): NOV is a very small 0.45% of the US long portfolio stake established last quarter at prices between $60 and $80.67. The position was increased by around 45% this quarter at prices between $64.40 and $84.83. The stock currently trades at around $70. The position is still very small but the stake increase indicates a mild bullish bias. For investors attempting to follow Buffett, NOV is a decent option to consider.
General Motors (GM): GM is 0.45% of the US long portfolio stake that was increased by 50% this quarter at prices between $18.80 and $24.80. The original position was purchased in Q1 2012 at prices between $21.05 and $27.34. The stock currently trades at around $24. The stake increase represents a mild bullish bias.
Kraft Foods Inc. (KFT): Buffett reduced the KFT stake by close to 50% this quarter. The stake disposal happened prior to the split-up of KFT into two companies as of 10/2/2012: Kraft Foods Group Inc. (KRFT) and Mondelez International (MDLZ).
The spin-off worked as follows: KFT was renamed as MDLZ. As a result, former shareholders of KFT received one share of MDLZ for every share of KFT held. KRFT was spun-off based on a distribution ratio of one share of KRFT for every three shares of MDLZ. As a result, former KFT shareholders also received one share of KRFT for every three shares of KFT held prior to the spin-off.
Johnson & Johnson (JNJ): JNJ was a ~1% of the US long portfolio position that was reduced to an insignificant stake this quarter at prices between $67.21 and $69.53. The stock currently trades at around $69.20. The stock has been in the portfolio since 2006 and the large stake reduction indicates a clear bearish bias.
Procter & Gamble (PG): PG is a 4.86% of the US long portfolio stake that was reduced by around 10% this quarter at prices between $61.19 and $69.76. The stock currently trades at $66.53. Buffett had over 75M shares of PG as of Q1 2012, but the stake has been reduced consistently since then to just over 50M shares as of this quarter. The original stake was a 100M share position established in 2005. The stake reduction indicates a bearish bias.
General Electric (GE), United Parcel Service (UPS), Verisk Analytics (VRSK), Visa Inc. (V), & Lee Enterprises (LEE): These are small positions that were incrementally reduced this quarter. The stake reductions indicate a mild bearish bias.
ConocoPhillips (COP) & US Bancorp (USB): These are larger positions (~2% each) that were reduced by around 10% this quarter. The stake was reduced by roughly the same percentage last quarter as well. The consistent stake reductions indicate a mild bearish bias.
American Express (AXP), Coca Cola (KO), Moody's Inc. (MCO), & Wal-Mart Stores (WMT): These are large stakes representing more than $1B each that were kept steady during the quarter. WMT is a newer stake first purchased in 2005 while the others have been in the portfolio for more than a decade. WMT stake was built up to an almost 4% position as of Q1 2012, but since then the position has been kept steady. WMT is poised to become a top-five position of Buffett in the coming quarters.
Costco Wholesale (COST), M&T Bank (MTB), Washington Post (WPO), Gannett Inc. (GCI), General Dynamics (GD), GlaxoSmithKline (GSK), Liberty Media Capital (LMCA), MasterCard Inc. (MA), Phillips 66 (PSX), Sanofi Aventis (SNY), Torchmark (TMK), and USG Corporation (USG): These are smaller positions that were left untouched in the quarter.
The spreadsheet below highlights changes to Berkshire Hathaway's US stock holdings in Q3 2012:
(click to enlarge)