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Before launching Wallace R. Weitz & Company in 1983, Wallace Weitz spent three years analyzing small cap stocks and another ten years at a brokerage firm as an analyst and portfolio manager. Now, his own company has approximately $4 billion in assets under management. It employs a value investing strategy and favors companies with good management and long-term prospects. Weitz Funds’ Partners III Opportunity Fund had one year net return of 5.4% for the period ended September 30, 2011. S&P 500 ETF (NYSEARCA:SPY) gained 1.1% during the same time period.

Top 20 positions of the fund as of September 30, 2011:

Company Name

Ticker

Value

Activity

BERKSHIRE HATHAWAY INC DEL

BRK.B

106500

26%

MICROSOFT CORP

MSFT

100724

-10%

AON CORP

AON

98973

-1%

WELLS FARGO & CO NEW

WFC

91115

7%

LIBERTY MEDIA CORP NEW

LINTA

90766

-15%

DELL INC

DELL

83199

-5%

TEXAS INSTRUMENTS INC

TXN

82174

19%

LIBERTY GLOBAL INC

LBTYK

77925

-2%

REDWOOD TRUST INC

RWT

75859

5%

GOOGLE INC

GOOG

73744

2%

TARGET CORP

TGT

66847

3%

CONOCOPHILLIPS

COP

64609

-3%

TYCO INTERNATIONAL

TYC

57988

9%

MARTIN MARIETTA MATERIALS

MLM

56617

27%

OMNICARE INC

OCR

48126

-7%

LABORATORY CORP AMERICA

LH

45122

11%

COMCAST CORP NEW

CMCSK

42510

0%

LIVE NATION ENTERTAINMENT

LYV

40942

25%

SANDRIDGE ENERGY INC

SD

40627

32%

C V S CAREMARK CORP

CVS

39073

35%

Weitz reduced the value of his portfolio from $2.3 billion at the end of June to $2.0 billion at the end of September. The number of positions in the portfolio was also lower. At the end of the second quarter, the fund reported to own 80 different positions. At the end of the third quarter, it disclosed owning 78 different positions. Weitz sold out a few positions over the third quarter. For instance, he sold out his $29 million position in Monsanto Co (NYSE:MON) and $12 million of Discovery Communications Inc (NASDAQ:DISCK). MON returned 20.03% and DISCK returned 8.11% since the end of September, compared with 12.00% for SPY.

Weitz is a big fan of Warren Buffett. The biggest position in the 13F portfolio of his fund is Berkshire Hathaway Inc (NYSE:BRK.B). Moreover, Weitz increased his stakes in this stock by 26% over the third quarter. According to the latest 13F filing of the fund, Weitz had over $100 million invested in BRK.B. Since September 30, BRK.B returned 10.81%, slightly lower than the 12.00% of the market.

Weitz also invested over $100 million in Microsoft Corp (NASDAQ:MSFT). The technology company returned 3.64% so far in the fourth quarter, underperforming the market by over 8 percentage points. But it is very likely that Microsoft is currently trading at a discount as the $214 billion market cap stock has a relatively low PE ratio of 9.26. Boykin Curry and Jean-Marie Eveillard are also bullish about Microsoft. At the end of September, Curry’s Eagle Capital Management and Eveillard’s First Eagle Investment Management both had nearly $500 million invested in this stock.

In the third quarter, Weitz opened a new position in Valeant Pharmaceuticals (NYSE:VRX). He initiated a brand new $38.4 million position in Valeant, which returned 26.00% so far in the fourth quarter, more than doubling the return of SPY. Weitz is also bullish about Wells Fargo & Co (NYSE:WFC), Dell Inc (NASDAQ:DELL), Google Inc (NASDAQ:GOOG), Target Corp (NYSE:TGT) and Liberty Media Corp (NASDAQ:LINTA).

We like Weitz. He has years of experience in investments and his fund had a good track record. He mainly invests in value stocks with great potential to grow in the future. Even though the top two positions in his portfolio did not beat the market, we like his stock picks. Some of his stock picks are also in Warren Buffett's portfolio. They both live in Omaha and they are both followers of Ben Graham. So it isn't very surprising that they invest in similar stocks.

Source: Wallace Weitz's Buffett-Like Stock Picks