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Q4 2012

Ticker

Cost (in MM)

Value (in MM)

Yield

Weight

Wells Fargo

(WFC)

$10,906

$15,592

2.70%

17.79%

Coca-Cola

(KO)

$1,299

$14,500

2.80%

16.54%

IBM

(IBM)

$11,680

$13,048

1.60%

14.88%

American Express

(AXP)

$1,287

$8,715

1.20%

9.94%

Wal-Mart

(WMT)

$2,837

$3,741

2.50%

4.27%

Munich Re

(Foreign)

$2,990

$3,599

4.31%

4.11%

Proctor and Gamble

(PG)

$336

$3,563

2.90%

4.06%

U.S. Bancorp

(USB)

$2,401

$2,493

2.30%

2.84%

Sanofi

(SNY)

$2,073

$2,438

3.30%

2.78%

Tesco

(OTCPK:TSCDY)

$2,350

$2,268

3.94%

2.59%

Moody's

(MCO)

$287

$1,430

1.60%

1.63%

ConocoPhillips

(COP)

$1,219

$1,399

4.40%

1.60%

POSCO

(PKX)

$768

$1,295

1.00%

1.48%

DIRECTV

(DTV)

$1,057

$1,154

0.00%

1.32%

Phillips 66

(PSX)

$660

$1,097

1.80%

1.25%

Others

$7,646

$11,330

12.92%

$49,796

$87,662

100.00%

There it is. The December 31, 2011 equity portfolio of Berkshire Hathaway which is run by the greatest investor the world has ever known, Warren Buffett.

I like to have a look at the portfolio every quarter to see what Warren Buffett is doing and if there is anything new going on. If Buffett is aggressively buying something, it deserves my attention as well. If a stock gets through his risk avoidance filter it has to be a good idea.

Concentration

If I had asked you before you looked at the list above how much of the Berkshire (BRK.A, BRK.B) portfolio was in the three largest positions, what would you have guessed? I bet you would have been low. Here are the numbers:

· Top 3 Positions - 49.21% of the portfolio (Coke, Wells Fargo, IBM)

· Top 5 Positions - 63.42% of the portfolio (add American Express and Wal-Mart to the Big 3 Above)

· Top 10 Positions - 81.94%

It really is quite unbelievable. Buffett is managing an equity portfolio of $87 billion and he has over 80% of it invested in just ten companies! He is still employing the same concentrated value investing approach while managing $87 billion as he did when managing a fraction of that years ago.

If it ain't broke, don't fix it!

Significant Dividend Yield

As you scroll through the list of companies that Buffett owns, you quickly realize that there is a pretty juicy yield attached to many of these companies. The entire group of individual holdings that Berkshire has a position worth over $1 billion in have an average yield of 2.42%.

Q4 2012

Ticker

Cost

Value

Yield

ConocoPhillips

$1,219

$1,399

4.40%

Munich Re

(Foreign)

$2,990

$3,599

4.31%

Tesco

$2,350

$2,268

3.94%

Sanofi

$2,073

$2,438

3.30%

Proctor and Gamble

$336

$3,563

2.90%

Coca-Cola

$1,299

$14,500

2.80%

Wells Fargo

$10,906

$15,592

2.70%

Wal-Mart

$2,837

$3,741

2.50%

U.S. Bancorp

$2,401

$2,493

2.30%

Phillips 66

$660

$1,097

1.80%

IBM

$11,680

$13,048

1.60%

Moody's

$287

$1,430

1.60%

American Express

$1,287

$8,715

1.20%

POSCO

$768

$1,295

1.00%

DIRECTV

$1,057

$1,154

0.00%

Average Yield

2.42%

Which Of These Companies Is Buffett Still Buying Relentlessly?

Quarter

Bought

Shares

Q1 2011

6,215,080

342,623,925

Q2 2011

9,703,683

352,327,608

Q3 2011

9,042,200

361,369,808

Q4 2011

22,333,820

383,703,628

Q1 2012

10,631,300

394,334,928

Q2 2012

16,710,317

411,045,245

Q3 2012

11,504,300

422,549,545

Q4 2012

17,308,316

439,857,861

Buffett keeps buying one company quarter after quarter after quarter. That company is Wells Fargo and the share purchases above are what Buffett has bought for Berkshire over the past two years.

With Wells Fargo shares trading in the $30 to $35 price range over this period, Buffett is socking away hundreds of millions of dollars every quarter into Wells Fargo shares.

Buffett obviously has serious conviction about the quality of Wells Fargo as an investment.

When I consider that:

· Buffett is the greatest equity investor ever

· He has likely studied Wells Fargo for 50 years

· He has had intimate knowledge of Wells Fargo for 25 years as a major shareholder

· He is still buying Wells Fargo today (at least as of last quarter) despite the fact that it is already almost 18% of his portfolio and $15.5 billion invested

It makes me feel silly to think that I could do something better with my cash today than follow Buffett into Wells Fargo. Given what Buffett is doing, I think Wells Fargo has to be a no-brainer buy at the current price.

Source: Checking Up On The Concentrated Warren Buffett Portfolio