This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway's (NYSE:BRK.A) US stock portfolio on a quarterly basis. It is based on Warren Buffett's regulatory 13F Form filed on 08/14/2012. 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 highlighting the moves during Q1 2012.
During Q2 2012, Berkshire's US long stock portfolio decreased marginally from $75.3B to $74.3B. The total number of holdings increased from 35 to 37 this quarter. The new positions are Lee Enterprises (NYSE:LEE), National Oilwell Varco (NYSE:NOV), and Phillips 66 (NYSE:PSX). The small stake in Intel Corporation (NASDAQ:INTC) was eliminated in the quarter. Compared to last quarter when the majority of the positions (23 out of 35) were left untouched, there were a lot more adjustments this quarter - only 14 of the 37 stocks in the portfolio remained steady this quarter. Even so, the largest five positions and their allocations remained steady. Combined they account for just below 75% of the overall portfolio value.
Phillips 66 : PSX is a 1.2% of the US long stock portfolio stake that Berkshire received this quarter as a result of the spin-off from ConocoPhillips (NYSE:COP). PSX began trading on May 1, 2012 and is up over 23% since that time. The spin-off ratio was one share of PSX for every two shares of COP. Buffett is very bullish on PSX as he has roughly doubled his original stake since the spin-off at prices between $29.35 and $34.90. The stock currently trades at around $40, well outside the range Buffett could have bought the new stake at. Investors attempting to follow Buffett will have to wait for a better entry-point.
National Oilwell Varco Inc. : NOV is a very small 0.25% of the US long portfolio stake established this quarter at prices between $60 and $80.67. The stock currently trades at around $76.50. The stake is very minor and does not indicate a clear bias.
Lee Enterprises : LEE is a miniscule investment established this quarter. Buffett has investments in other newspapers as well, most recently acquiring a number of publications from Media General (NYSE:MEG). LEE emerged from bankruptcy earlier this year. Although the sector is in deep trouble, Buffett is very interested in the area. He believes newspapers can thrive if they shift their focus to local content - reporting on national and international themes is a losing game for newspapers as there is much more competition from other media in those areas.
Intel Corporation : INTC was a ~0.3% of the US long stock portfolio stake first purchased in Q3 2011 at prices between $19.19 and $23.3. The stake was increased by almost a quarter in Q4 2011 at prices between $20.62 and $25.66. The last two quarters saw a complete about-turn: Buffett sold one-third of his position last quarter at prices between $24.25 and $28.88 and eliminated the position this quarter at prices between $25.04 and $29.18. The stock currently trades at around $26. The about-turn indicates a clear bearish bias.
International Business Machines (NYSE:IBM): IBM is Buffett's third largest stake at around 17.5%. The position was increased by around 3.5% this quarter. The original stake was purchased in Q3 2011 at prices between $157.54 and $185.21. Since then, the position has gone up by around 18% through purchases every quarter. The stock currently trades at around $198. Buffett is very bullish on IBM.
Wells Fargo & Co. (NYSE:WFC): WFC is Buffet's second largest stake at around 18.5%. The position is being incrementally increased every quarter and the tradition continues with an over 4% increase this quarter. Buffett is very bullish on WFC.
DIRECTV (NASDAQ:DTV), Liberty Media Capital (NASDAQ:LMCA), and Viacom (NASDAQ:VIAB): DTV is a 1.9% position first purchased in Q3 2011. It has since been built-up over several quarters. The bulk of the position was purchased in Q4 2011 at prices between $40.60 and $47.87. The stock currently trades at around $51.50. LMCA was a petite 0.35% stake first purchased in Q4 2011 at prices between $61.11 and $79.67. It was increased by ~75% last quarter at prices between $78 and $90. During this quarter, Buffett roughly doubled his stake at prices between $79.67 and $90.17. The position now represents around 0.65% of the portfolio. The stock currently trades at around $100. VIAB was a minute ~0.1% of the US stock portfolio stake that was established last quarter at prices between $45.41 and $49.38. It was increased by over 325% this quarter at prices between $45.66 and $49.02. The stock currently trades at around $49.64. Buffett has a clear bullish bias toward large media companies but these stocks are currently trading above the ranges Buffett could have bought them at.
DaVita Inc. (NYSE:DVA): DVA is a 1.2% of the US stock portfolio position that is being aggressively built-up. The stake was doubled last quarter and was increased by over 50% this quarter. The original position was purchased in Q4 2011 at prices between $60.64 and $76.81. The stake doubling last quarter happened at prices between $75.81 and $90.17. The stock traded between $80.23 and $98.21 this quarter and it currently trades at around $98.13. The company is the dominant player in the dialysis business in the US and Buffett is very bullish on the stock.
Bank of New York Mellon Corp (NYSE:BK): BK is a 0.55% of the US stock portfolio stake that was more than tripled this quarter at prices between $19.51 and $24.67. The stock currently trades at around $22. BK has been a minute presence in the portfolio since 2010. But, in the last two quarters, the position was increased substantially. Buffett is bullish on this stock and it is trading within the price range Buffett could have bought it at. For investors attempting to follow Buffett, BK is a very good option to consider.
Johnson & Johnson (NYSE:JNJ), Kraft Corporation (KFT), and Procter & Gamble (NYSE:PG): These are large positions that were trimmed substantially during the quarter. JNJ was held steady last quarter but the other two stocks were reduced substantially in the last quarter as well. The position sizes and the large stake reductions indicate a clear bearish bias.
CVS Caremark Corp. (NYSE:CVS), General Electric (NYSE:GE), Ingersoll-Rand (NYSE:IR), United Parcel Service (NYSE:UPS), Verisk Analytics (NASDAQ:VRSK), and Visa Inc. (NYSE:V): These are smaller positions that were reduced by well over 10% this quarter. The stake reductions indicate a mild bearish bias.
ConocoPhillips , Dollar General (NYSE:DG), and U.S. Bancorp (NYSE:USB): These positions were reduced marginally (less than 10%) this quarter. The minor stake reductions do not indicate a clear bias. The DG position was reduced substantially last quarter and so the further reduction this quarter indicates a mild bearish bias.
American Express (NYSE:AXP), Coca-Cola (NYSE:KO), Moody's Inc. (NYSE:MCO), and Wal-Mart Stores (NYSE:WMT): These are large stakes representing more than $1B each that were kept steady during the quarter. WMT is a newer stake first purchased in 2005 while the others have been in the portfolio for more than a decade. WMT stake was built up to an almost 4% position as of last quarter but was kept steady this quarter. The position is poised to become one of Buffett's coveted top-five positions if the pattern of selling in PG shares continues for another quarter.
Costco Wholesale (NASDAQ:COST), M&T Bank (NYSE:MTB), Washington Post (WPO), Gannett Inc. (NYSE:GCI), General Dynamics (NYSE:GD), General Motors (NYSE:GM), GlaxoSmithKline (NYSE:GSK), MasterCard Inc. (NYSE:MA), Sanofi Aventis (NYSE:SNY), Torchmark (NYSE:TMK), and USG Corporation (NYSE:USG): These are smaller positions that were kept steady this quarter.
The spreadsheet below highlights changes to Berkshire Hathaway's US stock holdings in Q2 2012: