This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway's (BRK.A) (BRK.B) U.S. stock portfolio on a quarterly basis. It is based on Warren Buffett's regulatory 13F Form filed on 02/14/2013. 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 Q3 2012.
During Q4 2012, Berkshire's U.S. long stock portfolio remained almost steady at $75.3B. But the total number of holdings increased from 38 to 41. The new positions are Archer Daniels Midland (ADM), Kraft Foods Group Inc. (KRFT), Mondelez International (MDLZ), and Verisign Inc. (VRSN). Of these, KRFT and MDLZ were acquired as a result of Kraft Foods Inc. (KFT) spin-off. The majority of the existing positions were left untouched although there were some incremental purchases and a couple of minor sells. Buffett continues to hold a very concentrated portfolio with the largest five positions accounting for 72.87% of the portfolio.
Archer Daniels Midland and Verisign Inc.: These are very small positions established this quarter and together they account for just 0.41% of the portfolio. ADM was purchased at prices between $24.48 and $29.10. It currently trades just outside that range at $31.40. Buffett said in a June 2011 interview with Bloomberg that ADM is the kind of company he would be interested in. The purchase, although minor is consistent with that comment - it will be interesting to see whether he will build on this position in the coming quarters. VRSN was purchased at prices between $34.15 and $49.48. It currently trades at $45.67. VRSN experienced a fleeting 20% price drop as a result of uncertainties regarding renewal of its .COM registry service contract with ICANN.
Kraft Foods Group Inc. and Mondelez International: Buffett acquired KRFT and MDLZ shares this quarter due to the spin-off of Kraft Foods Inc. (KFT). The spin-off (date of distribution - 10/1/2012) 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. The combined position was reduced by around two-thirds during the quarter. The original KFT position was reduced by 50% in the last quarter as well. Currently the two stakes together account for 0.53% of the U.S. long portfolio. The pattern of sales indicates a clear bearish bias toward both KRFT and MDLZ.
DaVita Inc. (DVA): DVA is a 2% of the U.S. stock portfolio position that was aggressively built-up over several quarters: the stake was doubled in Q1 2012, increased by over 50% in Q2 2012, and by an additional 24% this quarter. The original position was purchased in Q4 2011 at prices between $60.64 and $76.81. The large stake increase in Q1 2012 and Q2 2012 happened at prices between $75.81 and $98.21. The stock traded between $103 and $115 this quarter and it currently trades outside that range at $120. The company is the dominant player in the dialysis business in the U.S. and Buffett is very bullish on the stock.
DIRECTV (DTV) & Liberty Media Capital (LMCA): DTV is a 2.27% position first purchased in Q3 2011. The bulk of the current position was purchased in Q4 2011 at prices between $40.60 and $47.87. It was increased by around 15% this quarter at prices between $48.17 and $53.24. The stock currently trades near the mid-point of that price range at $50.21. LMCA is a 0.87% of the U.S. long portfolio first purchased in Q4 2011 at prices between $61.11 and $79.67 and has since been aggressively built-up over several quarters against rising prices. The stake was increased marginally this quarter. Buffett is bullish on both DTV and LMCA. For investors wishing to follow Buffett, these two stocks are good options to consider for further research.
General Motors (GM): GM is a 0.96% of the U.S. long portfolio stake that was increased by two-thirds this quarter at prices between $22.75 and $28.83. It was increased by 50% last quarter as well 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 $27.75. The stake increase over several quarters represents a bullish bias.
International Business Machines (IBM): IBM is Buffett's third largest stake at 17.32% of the portfolio. The position was increased marginally 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. During the quarter, the stock traded between $185 and $211 and it currently trades at around $200. Buffett is very bullish on IBM.
National Oilwell Varco Inc. (NOV): NOV is a small 0.48% of the U.S. long portfolio stake established in Q2 2012 at prices between $60 and $80.67. The position was increased by around 45% last quarter at prices between $64.40 and $84.83. The ~27% stake increase this quarter happened at prices between $64.87 and $82.03. The stock currently trades at around $70. The stake increase over several quarters indicates a bullish bias. For investors attempting to follow Buffett, NOV is a decent option to consider.
Precision Castparts (PCP) & Wabco Holding (WBC): PCP and WBC are small stakes established last quarter representing 0.50% and 0.35% respectively of the U.S. long portfolio. The PCP stake was increased by around 60% this quarter at prices between $170 and $190. The stock currently trades at around $185. The WBC stake was increased by 155% this quarter at prices between $56.27 and $65.19. The stock currently trades outside that range at $68.66. The stake build-up indicates a bullish bias toward both these companies.
Wal-Mart Stores (WMT): WMT is a stake first purchased in 2005 that was built up to a 4.30% position. The position was marginally increased this quarter at prices between $67.61 and $77.15. The stock currently trades at around $71.
Wells Fargo & Co. (WFC): WFC has become Buffett's largest stake at 19.96% this quarter edging out Coca Cola (KO) which is at 19.25%. The position is being incrementally increased every quarter and the tradition continues with a 4% increase this quarter at prices between $31 and $36. The stock currently trades at around $35. Buffett is very bullish on WFC.
Procter & Gamble (PG), General Electric (GE), United Parcel Service (UPS), Verisk Analytics (VRSK), Visa Inc. (V), ConocoPhillips (COP) & U.S. Bancorp (USB): These positions were reduced last quarter but kept steady this quarter. PG, COP, and USB are fairly large stakes (around 2% or more) that were reduced over multiple quarters. GE and UPS are minute positions (less than 0.1%) while VRSK and V are bit larger (less than 0.35%). The lack of activity this quarter does not indicate any clear bias.
Viacom (VIAB): VIAB is a 0.53% of the U.S. stock portfolio stake that was established in Q1 2012 at prices between $45.41 and $49.38. It was increased by over 325% in Q2 2012 at prices between $45.66 and $49.02. It was kept steady this quarter and was marginally increased last quarter. The stock currently trades at around $59.95.
Bank of New York Mellon Corp (BK): BK is a 0.67% of the U.S. stock portfolio stake that was more than tripled in Q2 2012 at prices between $19.51 and $24.67. The position was marginally increased last quarter at prices between $20.40 and $23.71 and was kept steady this quarter. The stock currently trades outside that range at around $28.
Deere & Company (DE) and Media General (MEG): DE and MEG are very small stakes established last quarter representing 0.46% and 0.03% respectively of the U.S. long portfolio. For MEG, the stake is significant as it represents around 17% of the outstanding shares.
American Express (AXP), Coca Cola , and Moody's Inc. (MCO): These are large stakes representing more than $1B each that were kept steady during the last two quarters. Buffett is very bullish on all three of these businesses.
Costco Wholesale (COST), M&T Bank (MTB), Washington Post (WPO), Gannett Inc. (GCI), General Dynamics (GD), GlaxoSmithKline (GSK), 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 U.S. stock holdings in Q4 2012: