Warren Buffett's Highest Conviction Investments (Part 2)

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Includes: COP, JNJ, MDLZ, USB, WMT
by: Zvi Bar

Warren Buffett is considered one of the best long-term investors out there. His company, Berkshire Hathaway (NYSE:BRK.A), is a holding company that maintains several large positions in well-known American companies, and wholly-owns many others. Many of his publicly-traded investments have above-average dividends and a history of growing them over time, as well as growing their underlying businesses.

Here is a recent performance chart of Berkshire Hathaway's B-class shares (NYSE:BRK.B), which are included within the S&P 500. Click on any image below to enlarge:
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Many investors like to keep track of what Warren Buffett holds, believing there is much to learn by following the investments made by such a highly acclaimed investor. Warren Buffett and other large investors, including hedge funds, must file quarterly reports indicating their holdings, allowing investors to identify any changes made, and the largest holdings of the company or fund.

Last week, I highlighted Warren Buffett's five largest equity investments according Berkshire Hathaway's last 13F quarterly filing. Each of Berkshire's top five investments is valued between about 5 and 14 billion U.S. dollars. This article covers Berkshire's next five largest investments (or 6-10), with each position being valued between 1.8 billion and 3.4 billion U.S. dollars: Kraft Foods (KFT), Wal-Mart Stores (NYSE:WMT), ConocoPhillips (NYSE:COP), U.S. Bancorp (NYSE:USB) and Johnson & Johnson (NYSE:JNJ).

Many individual investors should appreciate that these investments are in companies that are generally well-known. This familiarity should make it easier to understand the businesses, and allow for easy access to research and information on the companies and their prospects. For example, it is likely that the average American household contains some Kraft products in the kitchen and some Johnson & Johnson products in the bathroom, many of which may have been purchased at a Wal-Mart.

Below, I have provided the value of Berkshire's position in each of these equities and its stake in the company, as well as their present yield and 2012-to-date performance rates. In addition, I have provided a recent performance chart for each equity.

Kraft Foods
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  • Berkshire's position: $3.32 Billion

  • Stake: 4.93%

  • Equity Yield: 3.03%

  • 2012-to-date: +2.37%

Wal-Mart Stores
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  • Berkshire's position: $2.3 Billion

  • Stake: 1.14%

  • Equity Yield: 2.65%

  • 2012-to-date: -1.26%

ConocoPhillips
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  • Berkshire's position: $2.26 Billion

  • Stake: 2.25%

  • Equity Yield: 3.4%

  • 2012-to-date: 6.55%

U.S. Bancorp
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  • Berkshire's position: $2.02 Billion

  • Stake: 3.61%

  • Equity Yield: 1.71%

  • 2012-to-date: 8.21%

Johnson & Johnson
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  • Berkshire's position: $1.88 Billion

  • Stake: 1.06%

  • Equity Yield: 3.52%

  • 2012-to-date: -1.24%

Last week, Wal-Mart announced that it was increasing its dividend by about 9 percent, which may help the retailer rebound from a recent equity slip that followed a revised guidance update.

So far this year, out of the above-listed equities, Buffett has seen the best performance out of the U.S. Bancorp. Similarly, his larger financial equities, Wells Fargo (NYSE:WFC) and American Express (NYSE:AXP), are the top performers out of his five larger equity positions.

Several of these equities, as well as the broader market, are now at or near new 52-week highs. This may mean that some of these investments and the broader market are about to break through prior resistance points. However, it appears just as probable, if not more so, that a temporary correction period is overdue, and may be forthcoming.

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.