Buffett's Core Equity Holdings Look Ready To Appreciate This Earnings Season

by: Zvi Bar

Warren Buffett is considered one of the best long-term investors out there. His company, Berkshire Hathaway (NYSE:BRK.B), is a holding company that holds several large positions in well-known American companies. Additionally, most of his publicly traded investments have above-average dividends and a history of growing them over time.

Here is a recent performance chart of Berkshire Hathaway's B-class shares (click all images to enlarge).
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Below are Warren Buffett's largest equity investments according Berkshire Hathaway's last 13F quarterly filing. I have only included positions valued at over $1 billion, listed in size order: Coca-Cola (NYSE:KO), International Business Machines (NYSE:IBM), Wells Fargo (NYSE:WFC), American Express (NYSE:AXP), Procter & Gamble (NYSE:PG), Kraft Foods (KFT), Johnson & Johnson (NYSE:JNJ), Wal-Mart Stores (NYSE:WMT), ConocoPhillips (NYSE:COP) and US Bancorp (NYSE:USB).

I have provided the present yield as well as their 1-month & 3-month performance rates, and the distance each equity trades from its 52-week high and low as of Monday's market close.
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Performance of most of these stocks was strong during the last three months, with the only listed equity to be down being IBM. Though all of 2011, though, IBM was up over 25 percent and was the strongest performing listed equity, followed by Kraft. Buffett acquired the majority of his IBM position in the second half of 2011, and trimmed his Kraft position through the year. IBM is now Berkshire's second largest holding, behind Coca-Cola. Through the end of 2011, the best performing listed equities were Berkshire's banks, WFC and USB, followed by KFT and WMT.

Several of these equities are also very close to new 52-week highs. KO, PG, KFT, JNJ, WMT and USB all sit less than five percent from their 52-week highs, going into earnings season. Several of these stocks appear capable of making new 52-week highs if their earnings are particularly strong, or if the broader market remains positive. In fact, the group averages being under six percent down from an average 52-week high.

It is possible that several of these names will make new 52-week highs in advance of their earnings reports, especially if the broader market continues to show strength and announce positive reports. Kraft essentially trades at its 52-week high, with the potential to continue climbing in advance of the company's plans to split its food and confection businesses. Wal-Mart also recently made a new 52-week high and appears capable of moving higher on a strong holiday season earnings report.

Many individuals may also appreciate that these companies are generally familiar. This familiarity also makes it easier to understand the businesses, and allows for accessibility to information on the companies. Additionally, these companies tend to grow their dividends, which is something most income-oriented investors usually like.

Disclosure: I am long KFT. 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.