Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q1 2016 Update

| About: Berkshire Hathaway (BRK.A)

Summary

Berkshire Hathaway's 13F stock portfolio decreased from $131.86B to $128.57B this quarter.

Warren Buffett's largest three holdings are at ~52% of the entire portfolio.

Berkshire Hathaway added Apple, dropped AT&T, and increased Phillips 66 and Liberty Global plc during the quarter.

This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway's (NYSE:BRK.A) (NYSE:BRK.B) US stock portfolio on a quarterly basis. It is based on Warren Buffett's regulatory 13F Form filed on 05/16/2016. 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 for the moves in Q4 2015.

During Q1 2016, Berkshire Hathaway's US long stock portfolio decreased 2.49% from $131.86B to $128.57B. The top-five positions account for over two-thirds of the portfolio: Kraft Heinz Co., Wells Fargo, Coca Cola, International Business Machines, and American Express. There are 44 individual stock positions many of which are minutely small compared to the overall size of the portfolio.

Warren Buffett's writings (PDFs) are a treasure trove of information and are a very good source for anyone starting out on individual investing.

New stakes:

Apple Inc. (NASDAQ:AAPL): AAPL is 0.83% of the 13F portfolio stake established this quarter at prices between $93 and $110. The stock currently trades near the low end of that range at $93.88.

Stake Disposals:

AT&T Inc. (NYSE:T): The original AT&T stake was acquired in Q3 2015 as a result of AT&T's merger with DIRECTV that closed in July 2015. Berkshire held 31.35M shares of DIRECTV for which they received 59.32M shares (1:1.892 conversion ratio) of AT&T and $28.50 per share in cash. As a percentage of the portfolio, the position was relatively small at 1.22%. The DIRECTV stake was from Q3 2011 at a cost-basis in the low-40s. Last quarter saw a ~22% reduction at prices between $32.31 and $34.93 and the elimination this quarter was at prices between $33.51 and $39.45. Berkshire Hathaway harvested long-term gains from this position.

Precision Castparts (NYSE:PCP): The 0.74% of the portfolio PCP stake was built up over several quarters through Q1 2015. The bulk of the buying happened in the latter two quarters at prices between $200 and $241. On August 10th 2015, Berkshire Hathaway agreed to acquire PCP in a $235 per share cash deal and the transaction closed in January.

Stake Increases:

Liberty Media (NASDAQ:LMCA) (NASDAQ:LMCB) (NASDAQ:LMCK): LMCA is a petite 0.89% stake first purchased in Q4 2011. It was increased by ~75% in Q1 2012 and roughly doubled the next quarter. Q2 2014 saw a ~24% stake reduction and since then had been kept steady. Last quarter saw the stake almost doubled at prices between $20 and $22.41 and that was followed with another ~29% increase this quarter at prices between $18.56 and $22.62. The stock is currently at $18.76.

Note: On 4/15/2016, Liberty Media Corporation recapitalized its common stock into three tracking stocks, Liberty SiriusXM Group (NASDAQ:LSXMA) (NASDAQ:LSXMB) (NASDAQ:LSXMK), Liberty Braves Group (NASDAQ:BATRA) (OTCQB:BATRB) (NASDAQ:BATRK) and Liberty Media Group . Shareholders got 1 share of LSXMA/LSXMB/LSXMK, 0.25 shares of LMCA/LMCB/LMCK and 0.1 shares of BATRA/BATRB/BATRK for each share held. The prices quoted above for LMCA are adjusted for this transaction.

Phillips 66 (NYSE:PSX): The 2% of the US long portfolio PSX stake as of Q4 2013 was reduced to a 0.71% stake in Q1 2014. The reduction was due to a deal whereby Berkshire bought an operating business of PSX in exchange for ~19M shares of PSX stock. The position was further reduced by one-third the following quarter at prices between $76.69 and $86.33. Q1 2015 saw an about-turn: ~14% increase at prices between $59 and $80. Q2 2015 saw a ~300% increase at prices between $76.79 and $81.63 and that was followed with a stake doubling in the following quarter at prices between $70.55 and $84.32. This quarter also saw another ~23% increase in the high-70s price range. The stock currently trades at $78.68 which is very close to Berkshire's overall cost-basis. The current position is fairly large at 5.09% of the portfolio (~14.4% of the business). For investors attempting to follow Berkshire Hathaway, PSX is a good option to consider for further research.

Note 2: Berkshire avoided disclosing PSX stake in the original Q2 2015 13F by making use of the "section 13(f) Confidential Treatment Requests". An amendment filed on 9/4/2015 disclosed the huge stake build up.

Liberty Global PLC (NASDAQ:LBTYA) (NASDAQ:LBTYK): The position was established in Q4 2013 at prices between $37.50 and $44.50 (adjusted for the 03/2014 stock-split) and increased significantly in the following two quarters at prices between $38.49 and $46. The stock is now at $37.59 and the stake is at 0.68% of the US long portfolio. Last three quarters have seen a combined ~30% increase at prices between $30 and $50.

Bank of New York Mellon Corp (NYSE:BK): BK is a 0.60% of the US stock portfolio stake. The bulk of the original position was purchased in Q2 2012 at prices between $19.51 and $24.67. The stake was increased by 30% in Q2 2013 at prices between $26.70 and $30.55. The five quarters thru Q3 2015 had seen an about turn as there was a combined ~18% reduction at prices between $36 and $45. This quarter saw a ~4% increase. The stock currently trades at $39.74.

Charter Communications (NASDAQ:CHTR): CHTR is a 1.63% of the US long portfolio position. It was established in Q2 2014 at prices between $118 and $158 and more than doubled the following quarter at prices between $151 and $164. Q4 2014 saw a further ~25% increase at prices between $140 and $170. In Q2 2015, the position was again increased by ~42% at prices between $168 and $193 and that was followed with another ~21% increase the following quarter at prices between $167 and $195. The stock currently trades at $204 compared to Berkshire's cost-basis of $161.06. They control ~9% of the business. This quarter saw a marginal increase.

Deere & Company (NYSE:DE): DE stake was first acquired in Q3 2012 when around 4M shares were purchased at prices between $75.11 and $82.70. The position remained steady until Q3 2014 when an additional ~3.6M shares were purchased at prices between $82 and $91.38 - Berkshire avoided disclosing DE stake in Q3 2014 by making use of the "section 13(f) Confidential Treatment Requests". In Q4 2014, the position was increased by another 125% at prices between $80 and $91. Last quarter also saw another ~34% increase at prices between $72.89 and $80.91. The stock currently trades at $83.63 which is very near Berkshire's cost-basis of ~$80. The stake is at 1.39% of the portfolio and they control ~7.4% of the business. This quarter saw a very minor increase.

International Business Machines (NYSE:IBM): IBM is Buffett's fourth-largest stake at 9.57% of the portfolio. The original position was purchased in Q3 2011 at prices between $157.54 and $185.21. Since then, the stake has gone up by almost 40% through periodic purchases. The stock currently trades at $149. Berkshire's cost-basis on IBM is at around $170. Buffett is very bullish on IBM and controls 8.5% of the business. For investors attempting to follow Buffett, IBM is a very good option to consider for further research.

Note: Berkshire Hathaway's Q1 2016 10Q had the following regarding the IBM investment: "Unrealized losses at March 31, 2016 included approximately $1.5 billion related to our investment in IBM common stock, which represented 11% of our cost. IBM continues to be profitable and generate significant cash flows. We currently do not intend to dispose of our IBM common stock and we expect that the fair value of this investment will recover and ultimately exceed our cost."

Visa Inc. (NYSE:V): Visa is a very small 0.61% of the portfolio stake. The position saw a minor increase this quarter.

Stake Decreases:

Wal-Mart Stores (NYSE:WMT): WMT stake was first purchased in 2005. It has since been built up to a 2.61% position. The last significant activity was a 17% increase in Q1 2014 at prices between $72.66 and $78.91. Q3 2015 saw a ~7% trimming at prices between $63.10 and $73.88. The stock currently trades at $66. Berkshire's cost-basis is at around $56. This quarter saw a ~3% stake increase.

Procter & Gamble (NYSE:PG): PG position is now minutely small at 0.02% of the 13F portfolio. The original stake was huge but was almost eliminated this quarter as a result of a deal with Procter & Gamble for Duracell: $4.2B in PG stock was exchanged for a recapitalized Duracell. The transaction closed on February 29, 2016.

Wabco Holdings (NYSE:WBC): The very small 0.27% position saw a ~3% trimming this quarter. As a percentage of the business, the stake is significant at ~6%.

MasterCard Inc. (NYSE:MA): MA is a very small 0.36% of the 13F portfolio stake. The position saw a ~6% reduction this quarter.

Kept Steady:

American Express (NYSE:AXP) and Coca Cola (NYSE:KO): These are very large stakes that were kept steady during the last twelve quarters. Buffett has said these two positions will be held "permanently". Berkshire's cost-basis on AXP and KO are at around $8.49 and $3.25 respectively.

Note: Per AR 2015, Coca-Cola ownership grew from 9.2% to 9.3% and American Express from 14.8% to 15.6% due to buybacks.

DaVita Inc. (NYSE:DVA): DVA is a 2.20% of the US long portfolio position that was aggressively built-up over several quarters: the original stake was doubled in Q1 2012, increased by over 50% in Q2 2012, 24% in Q4 2012, and an additional 16% in Q1 2013. There has been marginal buying since. The bulk of the stake build-up happened at prices between $30 and $49. The stock currently trades at $77.07 compared to Berkshire's overall cost-basis of $45.33. In May 2013, Berkshire's Ted Weschler signed an accord with DVA, limiting open-market purchases to 25% of the company- the position is currently at 17.9% of the business.

General Motors (NYSE:GM): GM is a 1.22% of the US long portfolio position that was first purchased in Q1 2012 at prices between $21 and $30. The stake was increased by 60% in Q2 2013 at prices between $27.53 and $35.03. Q1 2014 saw a 25% reduction at prices between $34 and $41 and the following quarter saw an about-turn: ~10% increase at prices between $31.93 and $37.09. Q3 2014 saw another ~21% increase at prices between $31.94 and $37.97. There was another ~22% increase in Q3 2015 at prices between $27.28 and $33.33. The stock currently trades at $30.68.

Goldman Sachs (NYSE:GS): GS is a 1.34% of the US long portfolio stake established in Q4 2013. 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. Q3 2015 saw a ~13% reduction at prices between $172 and $213. It currently trades at $155.

Kinder Morgan Inc. (NYSE:KMI): KMI is a very small 0.37% of the 13F portfolio stake established last quarter at prices between $14.54 and $32.68. The stock currently trades at $17.22.

Kraft Heinz Co. (NASDAQ:KHC): KHC is currently the largest 13F stock position at 19.90% of the portfolio. Kraft Heinz started trading in July 2015 with Berkshire owning just over 325M shares (~27% of the business). The stake came about as a result of two transactions with 3G capital as partner: a $4.25B investment in 2013 for half of Heinz and a $5B investment for the acquisition of Kraft Foods Group earlier this year. All told, Berkshire's cost-basis on KHC is just below $30 per share compared to the current price of $85.87.

Moody's Inc. (NYSE:MCO): MCO is a 1.85% of the US long portfolio stake. It is a very long-term position and Buffett's cost basis is ~$10. The stock currently trades at $94.77. Berkshire controls 11.5% of the business.

Restaurant Brands International (NYSE:QSR): QSR is a 0.25% of the US long portfolio position established in Q4 2014 at prices between $35 and $42. The stock currently trades at $40.25. It started trading in December 2014 following a merger/rename transaction between Tim Hortons and Burger King Worldwide. Berkshire's stake in the business is ~4.2%.

Suncor Energy (NYSE:SU): SU is a small 0.65% of the US long portfolio position first purchased in Q2 2013 at prices between $27.40 and $32. 2014 saw a ~24% increase at prices between $27.74 and $43.08. Q3 2015 saw another roughly one-third increase at prices between $24.81 and $29.04. The stock currently trades at $27.13.

Twenty First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA): FOXA is a minutely small 0.19% of the US long portfolio stake established in Q4 2014 at prices between $31.77 and $39.01 and increased by ~31% the following quarter at prices between $32.80 and $38.40. Q3 2015 saw another ~44% increase at prices between $25.19 and $34.49. The stock currently trades at $28.93.

US Bancorp (NYSE:USB): USB, a 2.69% 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. In Q2 2013, ~17M shares were purchased at prices between $32.27 and $36.15. Q1 2015 saw a 4.57% increase at prices between $40.94 and $45.12 and that was followed with marginal increases in the following two quarters. Berkshire's cost-basis on USB is ~$32 and the stock is now at $41.69. Buffett controls 4.7% of the business.

USG Corporation (NYSE:USG): USG is a very long-term holding and there was a significant 21.39M share stake increase in Q4 2013 due to conversion of notes at $11.40 per share - Berkshire acquired the convertible notes during the financial crisis (2/2009) and USG opted to redeem them on 12/16/2013. Q2 2014 saw a ~11.5% stake increase at prices between $29.57 and $33.16. The stock currently trades at $28.24. Buffett controls around 27% of the business and his cost-basis is at around $19. For investors attempting to follow Berkshire, USG is a good option to consider for further research.

Verisign Inc. (NASDAQ:VRSN): VRSN was first purchased in Q4 2012 at prices between $34.15 and $49.48. The position was more than doubled in Q1 2013 at prices between $38 and $48 and another one-third the following quarter at prices between $44.39 and $49.27. Q1 & Q2 2014 also saw a combined ~17% increase at prices between $47 and $63. The stock currently trades at $85.15. The current position is at ~10% of the business.

Note: A Form 4 regulatory filing on 5/3/2016 shows Berkshire owning 12.95M shares compared to 12.99M shares in the 13F - marginal reduction at ~$90 per share.

Verizon Communications (NYSE:VZ): VZ is a small 0.63% of the US long portfolio position established in Q1 2014 at prices between $46 and $49.30. It was increased by ~36% the following quarter at prices between $45.94 and $50.05. The stock currently trades just outside those ranges at $51.22.

Wells Fargo & Co. (NYSE:WFC): WFC is Buffett's second-largest stake at 18.04% of the US long portfolio. Q1 2015 saw a ~7M share stake increase at prices between $50.72 and $56.17. The previous significant activity was in Q2 2013: over 18M shares were purchased at the time at prices between $34.66 and $38.20. The stock currently trades at $48.26. Berkshire's cost-basis is at ~$25.50. Last quarter saw a 2% increase at prices between $51 and $56.

Note: Per a regulatory filing, Berkshire's stake in WFC has crossed the 10% ownership threshold as a result of Wells Fargo's buybacks.

Axalta Coating Systems (NYSE:AXTA): AXTA is a small 0.53% of the portfolio stake established in Q2 2015 at prices between $27.62 and $36.37 and increased by ~16% the following quarter at prices between $24.49 and $33.52. The stock currently trades at $28.68. Although the position relative to the size of the portfolio is small, it is very significant that Berkshire owns ~9.8% of the business. Last quarter saw a marginal increase. For investors attempting to follow Berkshire, AXTA is a good option to consider for further research.

Costco Wholesale (NASDAQ:COST), General Electric (NYSE:GE), Graham Holdings (NYSE:GHC), Johnson & Johnson (NYSE:JNJ), Lee Enterprises (NYSE:LEE), Liberty LiLAC Group (NASDAQ:LILA) (NASDAQ:LILAK), M&T Bank (NYSE:MTB), Media General (NYSE:MEG), Mondelez International (NASDAQ:MDLZ), NOW Inc. (NYSE:DNOW), Sanofi (NYSE:SNY), Torchmark Corporation (NYSE:TMK), United Parcel Service (NYSE:UPS), and Verisk Analytics (NASDAQ:VRSK): These are very small positions (less than ~0.5% of the portfolio each) kept steady this quarter.

Note 1: Although the relative size of the position is small, it should be noted that Berkshire controls ~2.7% of Media General.

Note 2: Per the annual report, Berkshire has a $1.9B position in Sanofi - so in addition to the 13F securities listed in the spreadsheet, Berkshire also owns Sanofi securities listed in Euronext Paris.

The spreadsheet below highlights changes to Berkshire Hathaway's US stock holdings in Q1 2016:

Click to enlarge

Disclosure: I am/we are long GM, IBM, KMI.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.