This series of articles will be ongoing updates that analyzes changes to Berkshire Hathaway’s (NYSE:BRK.A) US stock portfolio from quarter to quarter. Please check-out our series on Tracking Berkshire Hathaway’s portfolio over the last ten years for an idea on how his holdings have progressed over the years.
The quarter saw Berkshire’s US stock portfolio increasing ~13% in size from $52.4B to $59.2B. Warren Buffett commented that the market lows in August gave him an opportunity to buy stocks “on sale” and in a PBS interview with Charlie Rose on August 16, 2011, he said: “Last Monday, we spent more money in the stock market buying than any day this year.”
International Business Machines (NYSE:IBM): This is by far the biggest stake that Berkshire Hathaway initiated this quarter. The stake is valued at just over $10B amounting to 90% of the value of his new stakes. IBM is an unusual pick for Warren Buffett as he has refrained from investing in technology companies. Large technology companies such as IBM are trading at a good discount to conservative fair value estimates.
CVS Caremark Corp (NYSE:CVS): Berkshire purchased 5.66 million shares of CVS this quarter and the stake is valued at just over $190 million. Berkshire has a history of investing in healthcare related companies only to dispose of them within a short time frame. As the investment is small (<0.3%), the purchase may not be very significant.
Directv (NASDAQ:DTV): Berkshire purchased 4.25 million shares of DTV this quarter and the stake is valued at around $180 million. Warren Buffett likes media companies that have the ability to generate strong cash-flow. He previously held Comcast (NASDAQ:CMCSA) between 2004 and 2010.
General Dynamcis (NYSE:GD): Berkshire purchased 3.06 million shares of GD this quarter and the stake is valued at around $174 million. This stake is unusual in that Buffett has not invested in defence companies in the last ten years. The stake is minor (<0.3%) and so it may not signify a shift in strategy.
Intel Corporation (NASDAQ:INTC): Berkshire purchased 9.33 million shares of INTC this quarter and the stake is valued at around $199 million. The stake is significant as that along with the IBM stake form the first investments of Warren Buffett in technology companies. The INTC stake is very small (<0.3%) and so it will be interesting to see whether Buffett will attempt to build on that stake in the coming quarters.
Visa Inc (NYSE:V): Berkshire purchased 2.29 million shares of Visa this quarter and the stake is valued at around $196 million. The stake is minor but still significant as Berkshire invested in Mastercard (NYSE:MA) in the first quarter of 2011. Also, Buffett’s American Express (NYSE:AXP) holdings are valued at 13% of the portfolio size. Buffett definitely likes credit card companies and it is likely that he will attempt to build one or both of these stakes in the coming quarters.
Wells Fargo Bank (NYSE:WFC): Berkshire increased his very large stake in WFC from ~352 million shares to ~361 million shares. The value of his holdings have come down from around $9.9B to $8.7B as the stock underperformed. WFC is one of his favourite holdings and he has increased his stake in WFC by around 7 times in the last ten years. Buffett is very bullish on bank stocks and has recommended purchasing them a number of times recently. Berkshire Hathaway’s stake in M & T Bank (NYSE:MTB) also increased slightly this quarter.
* The share count on Torchmark (NYSE:TMK) has increased but is not a stake increase – the share count is reflecting the 3-for-2 stock-split as of July 5, 2011.
Johnson & Johnson (NYSE:JNJ): Berkshire Hathaway’s holdings on JNJ decreased by more than 5 million shares in the last quarter. His stake is still valued at more than 4% of the portfolio ($2.4B). The stake was initiated in 2006 and was increased significantly in 2010. The positon had remained unchanged since then and so the disposal indicates a bearish bias.
Kraft (KFT): Berkshire Hathaway’s holdings on Kraft decreased by around 10 million shares in the last quarter. His stake is still valued at over 6% of the portfolio (more than $3B). Warren Buffett was very critical of Kraft’s purchase of Cadbury and the way the deal was structured. His Kraft holdings peaked in the fourth quarter of 2009 at 138 million shares and since then he has been slowly disposing off his holdings. Buffett definitely has a bearish bias on Kraft. It is however unclear what he thinks of the plan to split up Kraft as that announcement came in the middle of the quarter.
ConocoPhilips (NYSE:COP): Berkshire Hathaway’s holdings on ConocoPhilips (COP) decreased by a very small amount (700 shares!) in the last quarter. His COP holdings peaked at around 80 million shares in the fourth quarter of 2008 and since then he has been trimming his holdings. The disposal this quarter is very small and so does not signify a bearish bias. The stake is still valued at over 4% of the portfolio (over $2B).
Disclosure: I am long INTC, KFT. I have written cash-covered puts on WFC (Apr 2012 22).