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By Eric Winter

Warren Buffett has been known to build hefty positions in large and mega-cap stocks throughout his career (just refer to his $15bn position in Coca-Cola to see what we mean). But not every position in Berkshire Hathaway's portfolio has a market cap north of $100bn; as a matter of fact, he has turned some of his fund's attention to stocks that have market-caps under the $10bn range (and even under the $5bn range). In addition to this, he has expressed his conviction by keeping them in his portfolio for a year or greater, showing his dedication to seeing these small companies build up (or build back) both intrinsic and market value over time.

As we wait to see what Buffett's latest 13F filing for Q4 2012 looks like, we want to take a moment and evaluate how some of these positions with sub-$5bn market caps faired stretching back into 2011. Our interest is driven by our findings that the most popular small-cap stocks among hedge funds have outperformed the market by 18 percentage points per year, even despite the lag between actual investment and the date at which they are filed (read more about this phenomenon here). Monitoring the right small-caps has added significantly to a number of fund's bottom lines, which is why they should not be ignored. With that said, read on for our quick take on some of Buffett's small caps as they relate to a longer-term holding period.

Insurance holding company Torchmark Corporation (TMK) sits right along the $5bn market cap line and represents a $217mm investment for Buffett. The famed investor is no stranger to insurance companies, as evidenced by his multiple reinsurance holdings and his purchase of GEICO in 1996. This particular company caters to underserved communities with low-cost insurance. TMK recently reported fourth-quarter 2012 earnings with a slight beat, nudged along by higher premium revenue and increased insurance underwriting income, with expectations to still perform well in 2013. Analysts have come together to create a mean price target a year out of $58.73 for the stock, indicating a near-6% gain from current levels. Billionaire David Harding of Winton Capital Management has a tiny position compared with Buffett, with only $11.5mm invested.

Gannett Co., Inc. (GCI), an international company providing media and marketing solutions, has a paltry market cap of $4.5bn -- surprising given its global reach. The company's main line of business is newspaper circulation, with USA Today being its main publication. The past 12 months have netted a roughly 30% gain in share price for the stock, and when complemented by a high dividend yield of 4.1%, Buffett's 1.7mm shares got a respectable bump in value. Falling circulation numbers and reduced ad revenue could spell out woes for Gannett in the future, which has led analysts to be split between the bullish upswing of 2012 and the potential neutral performance for 2013. John W. Rogers of Ariel Investments has over 10mm shares of GCI.

Building material manufacturer USG Corporation (USG) had a blow-out year in 2012, almost doubling in value despite consistent misses on negative earnings estimates. While this paints a pretty picture for share performance dating back a year, looking even further back into the company's history reveals a steady decline for a number of years due to its high correlation to the performance of the U.S. housing and building markets. The stock traded north of $90 in 2005, but the recession took its toll on USG starting in 2006. Berkshire Hathaway intervened during this period of bankruptcy and has since been holding the bag, carrying shares at a significant loss. Ron Gutfleish of Elm Ridge Capital sees a reduced stock price again in USG's future, as he recently increased his put position by 65%.

The Washington Post Company (WPO) rounds out our list and represents another small-cap media play for Buffett. The stock doesn't break a market cap of $3bn despite its AAPL-esque share price near $400. WPO stands as a slightly less than 1% holding for Buffett in relation to total portfolio size, and the changes in both his holdings and the stock price have been relatively flat. The company just recently announced on the seventh of this month that it will be spinning off The Herald, another one of its publications, as spurred on by the same issues affecting Gannett (a soft economy and weak consumer demand). Billionaire Ken Griffin of Citadel Investment Group recently saw fit to up his position by 72%, as indicated by his last 13F filing (check out the rest of his holdings here).

Source: Warren Buffett's Small-Cap Mainstays