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 05/15/2013. 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 Q4 2012.
During Q1 2013, Berkshire's (BRK.A) (BRK.B) US long stock portfolio increased 12.89% from $75.31B to $85.02B. The total number of holdings remained steady at 41. Archer Daniels Midland and General Dynamics, two small positions were liquidated and replaced with Chicago Bridge & Iron and Starz. The majority of the existing positions were left untouched although there were some incremental purchases and a few minor sells. Buffett continues to hold a very concentrated portfolio with the largest five positions accounting for 72.86% of the portfolio.
Chicago Bridge & Iron (CBI): CBI is a very small 0.48% of the US long portfolio established this quarter at prices between $46 and $62. The stock currently trades at around $58. It will be interesting to see whether Buffett will choose to build on this position in the coming quarters.
Starz (STRZA): STRZA was acquired as a result of separation of Starz from Liberty Media that became effective in the beginning of the year. Buffett owned LMCA and so ended up with 4.67% of the company. On a relative basis, the stake is minute at just 0.15% of the US long portfolio. So, it is unclear whether Buffett would choose to keep this position as the portfolio impact even if it appreciates a lot will be minimal. Many high profile funds such as Steve Cohen's SAC Capital, Gates Foundation, D.E.Shaw, and Madison Street Partners have established recent stakes in Starz.
Archer Daniels Midland (ADM): ADM was a very small 0.22% of the US long portfolio position purchased last quarter at prices between $24.48 and $29.10. It was disposed of this quarter at prices between $27.39 and $33.73. The stock currently trades just outside that range at $34.71. Buffett said in a June 2011 interview with Bloomberg that ADM is the kind of company he would be interested in. The about turn this quarter indicates a mild bearish bias.
General Dynamics (GD): GD was a very small 0.36% of the US long portfolio stake established in Q3 2011 and Q4 2011 at prices between $56 and $78. It was disposed of this quarter at prices between $64.57 and $71.86. The stock currently trades at $76.71. The stake disposal indicates a mild bearish bias.
DaVita Inc. (DVA): DVA is 2.09% of the US long 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% in Q4 2012. This quarter, the position was increased by another 10% at prices between $108 and $123. 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 currently trades at around $130. Earlier this month, Berkshire's Ted Weschler signed an accord with DVA, limiting the open-market stake increase to 25% of the company - the stake is currently at 14%.
DIRECTV (DTV): DTV is a 2.48% 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 10% this quarter at prices between $48 and $57 after having been increased by around 15% last quarter at prices between $48.17 and $53.24. The stock currently trades well above at $65. Buffett is bullish on DTV. Investors wishing to follow Buffett should wait for a better entry point.
International Business Machines (IBM): IBM is Buffett's third largest stake at 17.09% 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 periodic purchases. The stock currently trades at around $203. Buffett is very bullish on IBM.
National Oilwell Varco Inc. (NOV): NOV is a small 0.62% of the US long portfolio stake established in Q2 2012 at prices between $60 and $80.67. The position was increased by around 45% in Q3 2012 at prices between $64.40 and $84.83 and by ~27% last quarter at prices between $64.87 and $82.03. This quarter, the position was again increased by over 40% at prices between $66 and $75. The stock currently trades at around $68. The stake increase over several quarters indicates a bullish bias. For investors attempting to follow Buffett, NOV is a good option to consider.
US Bancorp (USB): USB, a 2.45% stake, has been in the portfolio since 2006. The stake was doubled in 2007 and since then has been reduced by around 15% overall. This quarter saw a marginal increase in the position. Berkshire's cost-basis on USB is around $32 and the stock is trading just above that price at $34.
Verisign Inc. (VRSN): VRSN was purchased last quarter at prices between $34.15 and $49.48. The position was more than doubled this quarter to a 0.45% position at prices between $38 and $48. It currently trades at $49.27. VRSN experienced a fleeting 20% price drop as a result of uncertainties regarding renewal of its .COM registry service contract with ICANN and Buffett probably took advantage of the price drop to build the original position.
Wabco Holding (WBC): WBC is a small 0.35% of the US long portfolio stake that was increased by 155% last quarter at prices between $56.27 and $65.19. The stock currently trades outside that range at $77.57. The position was increased marginally this quarter.
Wal-Mart Stores (WMT): WMT is a stake first purchased in 2005 that was built up to a 4.33% position. The position was increased by 4% this quarter at prices between $68 and $75. The stock currently trades at around $80. Berkshire's overall cost-basis on the position is around $52.
Wells Fargo & Co. (WFC): WFC is Buffett's largest stake at 19.93% of the US long portfolio just ahead of Coca Cola (KO) which is at 19.03%. The position is being incrementally increased every quarter and the tradition continues with a 4% increase this quarter at prices between $34.66 and $38.20. The stock currently trades outside that range at $39.30. Buffett is very bullish on WFC and his overall cost-basis is around $24.
Bank of New York Mellon Corp (BK): BK is 0.62% of the US stock portfolio stake that was reduced by around 4% this quarter at prices between $26 and $29. The bulk of the position was purchased in Q2 2012 at prices between $19.51 and $24.67. The stock currently trades at $30.21. The minor stake reduction does not indicate a clear bias.
Kraft Foods Group Inc. (KRFT) and Mondelez International (MDLZ): Buffett acquired KRFT and MDLZ shares last quarter due to the spin-off of Kraft Foods Inc. (KFT). The combined position was reduced by around two-thirds last quarter and the pattern continued this quarter as both positions were reduced again this quarter. Currently the two stakes together account for just 0.35% of the US long portfolio. The pattern of sales indicates a clear bearish bias toward both KRFT and MDLZ.
American Express (AXP), Coca Cola, ConocoPhillips (COP), Moody's Inc. (MCO), Phillips 66 (PSX), and Procter & Gamble (PG): These are large stakes representing more than $1B each that were kept steady during the last two quarters. Buffett is very bullish on all of these businesses. Berkshire's cost-basis on AXP, KO, COP, MCO, PSX, and PG are around $8.50, $3.25, $50.53, $10, $32, and $6.40.
Costco Wholesale (COST), General Motors (GM), Liberty Media Capital (LMCA), M&T Bank (MTB), USG Corporation (USG), Viacom (VIAB), and Washington Post (WPO): These are positions that are over 0.5% of the US long portfolio that were kept steady this quarter. Berkshire is bullish on these positions although the stakes are low on a relative basis.
Deere & Company (DE), MasterCard Inc. (MA), Precision Castparts (PCP), Sanofi Aventis (SNY), Torchmark (TMK), and Visa Inc. (V): These are very small positions (0.2% to 0.5% of the US long portfolio) that were kept steady this quarter. The small stakes indicate a mild bullish bias.
Gannett Inc. (GCI), General Electric (GE), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Lee Enterprises (LEE), Media General (MEG), United Parcel Service (UPS), and Verisk Analytics (VRSK): These are minute positions (less than 0.2% of the US long portfolio) that were left untouched in the quarter.
The spreadsheet below highlights changes to Berkshire Hathaway's US stock holdings in Q1 2013: