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 02/14/2014. 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 2013.
During Q4 2013, Berkshire Hathaway's (BRK.A) (BRK.B) US long stock portfolio increased 14% from $92.03B to $104.84B. The total number of holdings remained steady at 43. Minutely small positions in Dish Network and GlaxoSmithKline were eliminated this quarter and there were two new additions: Goldman Sachs and Liberty Global PLC. The majority of the existing positions were left untouched although there were some incremental purchases and a few sells. Buffett continues to hold a very concentrated portfolio. The top-five positions remained the same as compared to last quarter and together they account for 65.24% of the portfolio. The largest position remained the same as last quarter - Wells Fargo & Company at a whopping 20.07% of the US long portfolio - Buffett broke a pattern of consistent buying in Wells Fargo last quarter and the position was kept steady this quarter as well. Warren Buffett's writings (pdfs) are a treasure trove of information and are a very good option for anyone starting out on individual investing.
Goldman Sachs (GS): GS is 2.14% of the US long portfolio stake established this quarter. Berkshire Hathaway received $5B worth of warrants to buy GS stock during the financial crisis (October 2008) at a strike price of $115 (43.5M shares) that was to expire October 1, 2013. Buffett exercised the right before expiry to start this long position. GS currently trades at $163.72. Buffett probably chose a cashless conversion whereby the majority of the position was liquidated to realize cash that funded the 12.63M share purchase at the strike price of $115 - GS stock traded between $153 and $177 during the quarter.
Liberty Global PLC (LBTYA): LBTYA is a minute 0.25% position established this quarter at prices between $74.90 and $89. The stock currently trades at $83.60.
GlaxoSmithKline (GSK) & DISH Network Corporation (DISH): GSK and DISH were very small (less than 0.05% of the portfolio) positions that were eliminated this quarter. As the stakes were very small, the activity does not indicate a clear bias.
DaVita (DVA): DVA is a 2.20% 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. In Q1 2013, the position was increased by another 10% at prices between $54 and $62. Since then, the position was kept relatively steady although last quarter saw minor buying. The original position was purchased in Q4 2011 at prices between $30.32 and $38.40. The large stake increase in Q1 2012 and Q2 2012 happened at prices between $37.90 and $49.10. This quarter saw a ~16% stake increase at prices between $55 and $64. The stock currently trades at around $66.37. In early May, 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 17% of the business. Note: DVA stock split 2-for-1 on 09/09/2013 and so the prices noted are split-adjusted.
Exxon Mobil (XOM): XOM is a 3.97% of the US long portfolio stake. The position was first purchased in Q2 2013 but Buffett avoided disclosing it until last quarter by making use of the "section 13(f) Confidential Treatment Requests". The original stake was a 3.09% of the US long portfolio position established at prices between $86 and $93. Last quarter, the position was increased by ~28% at prices between $86.42 and $95.20. This quarter saw a marginal stake increase. The stock currently trades at $94.11. The relatively large stake build-up indicates a clear bullish bias. For investors attempting to follow Buffett, XOM is a good option to consider.
U.S. Bancorp (USB): USB, a 3.06% stake, has been in the portfolio since 2006. The position was tripled during the 2007-2009 timeframe and since then was reduced by around 15% overall as of EOY 2012. Q1 2013 saw a marginal increase in the position and the following quarter saw more activity as ~17M shares were purchased at prices between $32.27 and $36.15. Last quarter saw a marginal increase at prices between $35 and $38 and this quarter was more of the same - marginal increase at prices between $35.70 and $40.60. Berkshire's cost-basis on USB is around $33 and the stock is trading well above that price at $40.79. Buffett controls 5.3% of the business.
Wal-Mart Stores (WMT): WMT is a stake first purchased in 2005. It has since been built up to a 3.71% position. The position was increased by 4% in Q1 2013 at prices between $68 and $75 and had since been kept steady. This quarter saw a minor stake increase at prices between $71.87 and $81.21. The stock currently trades at around $75.79. Berkshire's overall cost-basis on the position is around $52.
USG Corporation (USG) & General Electric (GE): These are small positions that were roughly doubled this quarter. USG is a very long-term holding and the stake increase this quarter is due to conversion of notes at $11.40 per share (21.39M shares) - Berkshire acquired the convertible notes during the financial crisis (2/2009) and USG opted to redeem them on 12/16/2013. The stock currently trades at $34.26. Buffett controls around one-third of the business.
Moody's Inc. (MCO): MCO is a 1.85% of the US long portfolio stake that was decreased by 14% in Q2 2013 at prices between $52.23 and $68.62. It was kept steady last quarter but was marginally decreased this quarter. The stock currently trades at $79.53. Buffett's cost basis is just over $10 and so he is sitting on large long-term capital gains on this position. The stock returned around 48% in 2013 and Berkshire controls 11.5% of the business.
ConocoPhillips (COP): COP is a long-term position that has been in the portfolio since 2006. Berkshire's cost-basis on COP is around $50.53. The position was reduced by 44% last quarter at prices between $60.50 and $71 and another ~18% this quarter at prices between $69 and $74.31. The stock currently trades at $65.53 and the remaining stake is at 0.75% of the US long portfolio. The significant stake reduction of a long-term position indicates a clear bearish bias.
Liberty Media Capital (LMCA), Suncor Energy (SU), and Starz (STRZA): These are small positions (less than 0.75% of the US long portfolio each) that were reduced this quarter. SU is a 0.43% of the US long portfolio position established in Q2 2013 at prices between $26.84 and $32.36. The position was marginally increased last quarter at prices between $29.50 and $36.58. It was reduced by ~28% this quarter at prices between $33.50 and $37. The stock currently trades at $33.40. STRZA was acquired as a result of separation of Starz from Liberty Media that became effective BOY 2013. Buffett owned LMCA and so ended up with 4.67% of the company. On a relative basis, the stake is minute at just 0.13% of the US long portfolio and the quarter saw a 20% stake reduction.
Wells Fargo & Co. (WFC): WFC is Buffett's largest stake at 20.07% of the US long portfolio well ahead of Coca-Cola (KO) which is at 15.76%. The position was being incrementally increased every quarter but last two quarters saw no buying at all. ~5M shares were purchased in Q2 2013 at prices between $36.27 and $41.56. That purchase was far less compared to Q1 2013 when over 18M shares were purchased at prices between $34.66 and $38.20. The stock currently trades at $46.13. Buffett is very bullish on WFC and his overall cost-basis is around $24. Even so, from the buying pattern in the last few quarters, it looks like his voracious appetite for WFC has subsided. Buffett controls 9.3% of the business.
International Business Machines (IBM): IBM is Buffett's fourth largest stake at 12.19% of the portfolio. The position was increased marginally in Q1 2013 and has since been kept steady. 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 $183.69. Buffett is very bullish on IBM and controls 6.3% of the business. For investors attempting to follow Buffett, IBM is a very good option to consider.
DIRECTV (DTV): DTV is a 2.41% 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% in Q1 2013 at prices between $48 and $57 after having been increased by around 15% in Q4 2012 at prices between $48.17 and $53.24. The position was kept steady in Q2 2013 and saw a minor 2% stake reduction last quarter at prices between $57.50 and $65.25. The stock currently trades at around $71.89. Buffett controls 6.9% of the business.
American Express (AXP), Coca-Cola, Phillips 66 (PSX), and Procter & Gamble (PG): These are large stakes representing more than $1B each that were kept steady during the last five quarters. Buffett is very bullish on all of these businesses. Berkshire's cost-basis on AXP, KO, PSX, and PG are around $8.50, $3.25, $32, and $6.40.
Sanofi-Aventis (SNY): SNY is a very small 0.20% position. Berkshire owns 2% of Sanofi per the Annual Report and so in addition to the 13F securities listed in the spreadsheet, Berkshire also owns Sanofi securities listed in Euronext Paris.
Bank of New York Mellon Corp. (BK): BK is a 0.82% of the US stock portfolio stake that was increased marginally last quarter at prices between $28 and $32.21. The position was increased by 30% in Q2 2013 as well at prices between $26.70 and $30.55. Q1 2013 saw a minor 4% stake reduction 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 $31.79.
Verisign Inc. (VRSN): VRSN was purchased in Q4 2012 at prices between $34.15 and $49.48. The position was more than doubled in Q1 2013 to a 0.45% position at prices between $38 and $48. In Q2 2013, the stake was again increased by one-third at prices between $44.39 and $49.27. Last quarter saw a marginal stake increase at prices between $44.66 and $51.90. It currently trades at $54.52. The current position is at 8% of the business.
Kraft Foods Group Inc. (KRFT) and Mondelez International (MDLZ): Buffett acquired KRFT and MDLZ shares in Q4 2012 due to the spin-off of Kraft Foods Inc. The combined position was reduced by around two-thirds that quarter and the pattern continued in Q1 2013 as both positions were reduced further. In Q2 2013, the positions were reduced to insignificantly small stakes and have since been kept steady.
General Motors (GM): GM is a 1.56% of the US long portfolio position that was first purchased in Q1 2012. The stake was increased by 60% in Q2 2013 at prices between $27.53 and $35.03 and has since been kept steady. The stock currently trades at $35.95.
Chicago Bridge & Iron (CBI): CBI is a 0.76% of the US long portfolio position that was increased by 47% in Q2 2013 at prices between $50.92 and $63.75 and has since been kept steady. The original position was purchased in Q1 2013 at prices between $46 and $62. The stock currently trades well outside those ranges at around $79.42. Berkshire controls 8.9% of the business.
National Oilwell Varco Inc. (NOV): NOV is a 0.67% of the US long portfolio stake that was increased by ~19% in Q2 2013 at prices between $64.14 and $71.57 and has since been kept steady. The position was established in Q2 2012 at prices between $60 and $80.67. The stock currently trades at around $76.42.
Costco Wholesale (COST), M&T Bank (MTB), Viacom (VIAB), and Graham Holdings (GHC) previously Washington Post: These are positions that are over ~0.5% of the US long portfolio that were kept steady in the last four quarters. Berkshire is bullish on these positions although the stakes are low on a relative basis. Berkshire owns 27.8% of the shares outstanding in GHC.
Wabco Holdings (WBC): WBC is a small 0.36% of the US long portfolio stake that was increased by 155% in Q4 2012 at prices between $56.27 and $65.19. The stock currently trades outside that range at $96.37. The position was increased marginally in Q1 2013 but has since been kept steady. Buffett controls 6.6% of WBC.
Deere & Company (DE), MasterCard Inc. (MA), Precision Castparts (PCP), 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.
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 Q4 2013: