Many investors now crave safer than average equity options, relatively speaking. The recent steep selling has again spooked many retail investors, with most still fearful from the 2008 crisis. Now investors are looking for equities that offer some safety and a strong long-term investment value proposition.
There are literally thousands of equities, mutual funds, closed-end funds, ETFs, ETNs and other options for the American retail investor, even if they restrict themselves to the major markets. A prudent idea may be to restrict consideration of new investment decisions to those high-conviction investments made by one or a few of the more respected investors currently participating in the open market.
Warren Buffett is considered one of the best long-term investors out there. His company, Berkshire Hathaway (BRK.A) currently holds several large positions in equities, both in terms of value and the total stake held in those companies.
See Berkshire Hathaway’s recent chart, below - (click to enlarge):
Below, I have listed the equities traded on a major American exchange in which, as of its last 13F reporting, dated November 14, 2011, Berkshire owned at least two percent of the company. I have also included their performance so far in 2011, not counting dividends. The positions are listed in order of stake size within the underlying company.
The shares held in International Business Machines (NYSE:IBM) are based upon Mr. Buffett’s stating Berkshire owned 64 million IBM shares on November 14, 2011, and not according to a somewhat lower stake as listed on the 13F, which listed 57.3 million shares. The other positions are based upon Berkshire’s holdings at the end of the third quarter, as no newer information is known.
The Washington Post Company (WPO)
Shares Owned (Value): 1,727,765 ($612,924,633)
Percent Stake: 22.38%
2011-to-date Performance: -19.28%
USG Corporation (USG)
Shares Owned (Value): 17,972,192 ($165,429,540)
Percent Stake: 16.21%
2011-to-date Performance: -40.95%
American Express Company (AXP)
Shares Owned (Value): 151,610,700 ($7,295,506,884)
Percent Stake: 13.05%
2011-to-date Performance: 12.11%
Moody’s Corp. (MCO)
Shares Owned (Value): 28,415,250 ($937,987,402)
Percent Stake: 12.8%
2011-to-date Performance: 24.37%
The Coca-Cola Company (KO)
Shares Owned (Value): 200,000,000 ($13,402,000,000)
Percent Stake: 8.81%
2011-to-date Performance: 1.88%
Wells Fargo & Company (WFC)
Shares Owned (Value): 361,369,808 ($9,012,563,011)
Percent Stake: 6.85%
2011-to-date Performance: -19.51%
International Business Machines (IBM)
Shares Owned (Value): 64,000,000 ($11,943,680,000)
Percent Stake: 5.43%
2011-to-date Performance: 27.16%
Kraft Foods, Inc. (KFT)
Shares Owned (Value): 89,746,708 ($3,157,289,187)
Percent Stake: 5.08%
2011-to-date Performance: 11.65%
M&T Bank Corp. (NYSE:MTB)
Shares Owned (Value): 5,382,040 ($387,183,957)
Percent Stake: 4.28%
2011-to-date Performance: -17.35%
Torchmark Corp. (NYSE:TMK)
Shares Owned (Value): 4,235,818 ($177,311,341)
Percent Stake: 4.16%
2011-to-date Performance: 5.09%
US Bancorp (NYSE:USB)
Shares Owned (Value): 69,039,426 ($1,756,362,997)
Percent Stake: 3.62%
2011-to-date Performance: -5.67%
Procter & Gamble Co. (NYSE:PG)
Shares Owned (Value): 76,766,036 ($4,857,754,758)
Percent Stake: 2.79%
2011-to-date Performance: -1.62%
Shares Owned (Value): 29,100,937 ($2,030,081,365)
Percent Stake: 2.19%
2011-to-date Performance: 2.43%
Most of Berkshire’s largest investments are also large stakes. Eight of Berkshire’s ten largest holdings are two percent or higher stakes, and five of those are five percent or higher stakes.
The substantial declines some of these equities have undergone show that Berkshire’s ownership alone is not sufficient to presume an investment comes with a margin of safety. Nonetheless, those substantial stakes do indicate that Berkshire has a high level of conviction in the businesses, and Berkshire tends to accumulate and increase such stakes in times of depreciation.
Disclosure: I am long KFT.
Disclaimer: This article is intended to be informative, and should not be construed as personalized advice, as it does not take into account your specific situation or objectives.