Which Of Berkshire Hathaway's Top Ten Holdings May Be Worth Buying?

| About: Berkshire Hathaway (BRK.A)

Summary

The portfolios of the world's top investors are a great place to look for investment ideas.

What better place to start than to look in the Berkshire Hathaway portfolio.

A look at the share price performance of the top ten Berkshire holdings reveals a couple of underperformers that may be worth further investigation.

I've always wished that I was as smart as Warren Buffett.

I mean I've tried really hard. I've read all of the Berkshire shareholder letters, countless investing books and I've got a very real business degree.

I even take lots of fish oil and ginkgo biloba.

Now I know that Buffett downplays the importance of intelligence when it comes to investing, but I believe he is being a little modest. The reality is that I (like most people) am never going to match the investing prowess of Buffett and several other SuperInvestors because they are exceptional thinkers.

Image result for warren buffett

Source: Twitter

The day that I admitted that to myself was the day that I became a much better investor. Instead of trying to invest like Buffett and other great investors I decided to invest with them by cherry picking their highest conviction ideas.

Since the market has had a great run, I thought today would be a good time to check in with Buffett's portfolio and see which of his stocks may have run too far with the bull.

Consider this as your starting point for looking further into some of Buffett's stocks for current investments.

Let me know in the comment section of the article if you find this approach useful. If you do I'll do something similar for some of the other really great investors (Klarman, Einhorn, Greenblatt etc).

Make sure you click the follow button at the top of this article so that you can receive those future articles.

His Current Portfolio - Recent Performance

The table below lists the Berkshire portfolio (NYSE:BRK.A) as of the last quarterly filing (Sep 30, 2016).

Ticker Company Shares Owned Sep 30 Shares Owned Jun 30 Value Of Holding Portfolio %
KHC Kraft Heinz 325,634,818 325,634,818 $29,147,573,000 22.63%
WFC Wells Fargo 479,704,270 479,704,270 $21,241,306,000 16.49%
KO Coca-Cola 400,000,000 400,000,000 $16,928,001,000 13.14%
IBM IBM 81,232,303 81,232,303 $12,903,752,000 10.02%
AXP American Express 151,610,700 151,610,700 $9,709,150,000 7.54%
PSX Phillips 66 80,689,892 78,782,000 $6,499,571,000 5.05%
USB US Bancorp 85,063,167 85,063,167 $3,648,359,000 2.83%
MCO Moodys 24,669,778 24,669,778 $2,671,244,000 2.07%
CHTR Charter Communications 9,443,491 9,337,491 $2,549,459,000 1.98%
DVA DaVita 38,565,570 38,565,570 $2,548,027,000 1.98%
DE Deere 21,085,061 21,959,246 $1,799,610,000 1.40%
GS Goldman Sachs 10,959,519 10,959,519 $1,767,441,000 1.37%
AAPL Apple 15,227,702 15,227,702 $1,721,492,000 1.34%
GM General Motors 50,000,000 50,000,000 $1,588,501,000 1.23%
VRSN VeriSign 12,952,745 12,952,745 $1,013,423,000 0.79%
$115,736,909,000 89.86%

I've included Berkshire's 15 largest positions at the time as well as how many shares of these companies Berkshire owned as of the prior filing of June 30, 2016.

It is quite interesting to see some of the holdings that are quite clearly positions of the two Berkshire investing lieutenants (Combs and Weschler) appearing in this list. They must be growing their portfolios very quickly to have individual positions this large.

They must also be very concentrated, I suspect Weschler more than Combs.

Source: Bloomberg

Let's run through the top 10 Berkshire holdings and see how the share prices have been moving as a way to fine tune which positions we should be looking more closely at.

Position #1 - Kraft Heinz (NASDAQ:KHC)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Flat

Buffett Buying Last Quarter - No

Worth A Closer Look - Maybe, depending on how your view of partnering with 3G is.

Position #2 - Wells Fargo (NYSE:WFC)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Up 20 Percent

Buffett Buying Last Quarter - No

Worth A Closer Look - Probably not after post Trump run although rising interest rates and Trump deregulation are helpful

Position #3 - Coca-Cola (NYSE:KO)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Flat

Buffett Buying Last Quarter - No, not since 1994

Worth A Closer Look - Probably not given he hasn't bought since 1994 (although he already has $17 billion worth!)

Position #4 - International Business Machines (NYSE:IBM)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Up 10%

Buffett Buying Last Quarter - No

Worth A Closer Look - Maybe, IBM shares have actually had a great year which probably puts Buffett back to close to break-even on his original investment (a massive one).

Position #5 - American Express (NYSE:AXP)

stock chart

Stock Movement Since Sep 30 - Up 20 percent

Buffett Buying Last Quarter - No

Worth A Closer Look - No, another financial that has been on a tear over the last quarter and all year.

Position #6 - Phillips 66 (NYSE:PSX)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - 4 percent

Buffett Buying Last Quarter - Yes

Worth A Close Look - Absolutely. The share price of Phillips 66 hasn't moved much and Buffett has been a steady buyer for a long while now

Position #7 - US Bancorp (NYSE:USB)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - 25 percent

Buffett Buying Last Quarter - No

Worth A Look - Probably not. Same reasoning as Wells Fargo really. We managed to get our Superinvestor Bulletin subscribers into one financial before the Trump rally, but it the value proposition in this sector is now tough to assess.

Position #8 - Moody's (NYSE:MCO)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Down 10 percent

Buffett Buying Last Quarter - No

Worth A Look - No. I'm jaded on this one though given how useless this company was for investors ruined by the housing collapse. This is a very old holding of Buffett's he hasn't bought for a long while.

Position #9 - Charter Communications (CHTR)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - 14%

Buffett Buying Last Quarter - Yes, small amount

Worth A Closer Look - Probably not. It is very hard for me to get motivated to take a long look at a company of this size that has had a near double in share price over the past year. That is a bias of mine though, not necessarily a good one. This is a Weschler/Combs position and not one of Buffett's.

Position #10 - DaVita Healthcare Partners (NYSE:DVA)

stock chart

Source: Edgar

Stock Movement Since Sep 30 - Down a couple percent

Buffett Buying Last Quarter - No

Worth A Closer Look - Yes. A Weschler position for certain the share price hasn't done much for quite some time and merits a more in-depth analysis.

Conclusion

I've been writing for months now that the S&P 500 is expensive. Many of the companies that Buffett holds have also experienced share price runs over the past quarter which clearly changes the value proposition.

I've identified the two of Buffett's top 10 that I think deserve a more detailed look. I'd be interested in hearing in the comment section what you think.

About The Superinvestor Bulletin

The ideas that make up our portfolio are currently ahead of the S&P by 12.58% on average since inception (as of January 6, 2017). We just released our latest idea which represents a staggering 15 percent of the portfolio of a world-class activist investor who has averaged 20% annualized returns.

With the activist investor providing the catalyst to realize value, we believe that this company would be a great one to own should the market find itself in a correction. You can take a free trial here, please be aware our annual subscription rate goes from $169 to $195 on February 1, 2017.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

About this article:

Expand
Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.
Tagged: , , , Property & Casualty Insurance
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here