Wednesday, February 15, 2012

Berkshire Hathaway 4th Quarter 2011 13F-HR

The Berkshire Hathaway (BRKa4th Quarter 2011 13F-HR was released yesterday.

For comparison purposes here's the 3rd Quarter 2011 13F-HR.

This quarter some new positions were added while they continued to build upon several existing positions.

There also was a bit of selling.

This post summarizes the changes made in the previous Berkshire Hathaway 13F-HR.

Here's what changed during the 4th quarter:*

New Positions
DaVita (DVA): Bought 1.7 million shares worth $ 145 million
Liberty Media (LMCA): 2.7 million shares worth $ 227 million

Added to Existing Positions
IBM (IBM): Bought 6.6 million shares worth $ 1.3 billion (11% increase), total stake $ 12.3 billion
DirecTV (DTV): 16.1 million shares worth $ 738 million (379% increase), total stake $ 933.2 million
Wells Fargo (WFC): 22.3 million shares worth $ 679 million (6% increase), total stake $ 11.7 billion
Visa, Inc. (V): 573 thousand shares worth $ 215 million (25% increase), total stake $ 329.5 million
CVS (CVS): 1.4 million shares worth $ 63 million (26% increase), total stake $ 308.3 million
Intel (INTC): 2.2 million shares worth $ 58 million (23% increase), total stake $ 307.8 million
General Dynamics (GD): 813 thousand shares worth $ 57 million (27% increase), total stake $ 272 million
Verisk (VRSK):  1.3 million shares worth $ 55 million (64% increase), total stake now $ 140 million

In my previous summary, I mentioned some Berkshire 13F filings have the following statement:

"Confidential information has been omitted from the Form 13F and filed separately with the Commission."

Not this one.

From time to time, the SEC allows Berkshire Hathaway to keep certain moves in the portfolio confidential. The permission is granted by the SEC when a case can be made that the disclosure may cause buyers to drive up the price before Berkshire makes its additional purchases.

Reduced Positions
Kraft (KFT): sold 2.7 million shares worth $ 104 million (3% decrease), total stake now $ 3.3 billion
Johnson & Johnson (JNJ): 8.4 million shares worth $ 544 million (23% decrease), total stake now $ 1.9 billion

Sold Positions
Exxon Mobil (XOM) was sold outright.

The small positions are likely not the work of Buffett himself. Both Todd Combs, hired in 2010 and Ted Weschler, hired last year and expected to join in early 2012, are responsible for a portion of Berkshire's portfolio. So expect any changes involving the small positions to generally be the work of the new portfolio managers.

Top Five Holdings
After the changes, Berkshire Hathaway's portfolio of equity securities is made up of ~ 34% consumer goods, 31% financials, 18% technology, 7% consumer services, and 4% healthcare. The remainder is primarily spread across industrials and energy.

1. Coca-Cola (KO) = $ 13.8 billion
2. IBM (IBM) = $ 12.7 billion
3. Wells Fargo (WFC) = $ 11.7 billion
4. American Express (AXP) = $ 7.9 billion
5. Procter and Gamble (PG) = $ 4.9 billion

As is almost always the case it's a very concentrated portfolio.

The top five often represent 60-70 percent and, at times, even more of the equity portfolio. In addition, Berkshire owns equity securities listed on exchanges outside the U.S.**, plus cash and cash equivalents, fixed income, and other investments. The entire portfolio is currently worth more than $ 150 billion.

The portfolio, of course, excludes all the operating businesses that Berkshire owns outright.

Here are some examples of the non-insurance businesses:

MidAmerican Energy, Burlington Northern Santa Fe, McLane Company, The Marmon Group, Shaw Industries, Benjamin Moore, Johns Manville, Acme Building, MiTek, Fruit of the Loom, Russell Athletic Apparel, NetJets, Nebraska Furniture Mart, See's Candies, Dairy Queen, The Pampered Chef, Business Wire, Iscar Metalworking, and Lubrizol among others.

In addition, the insurance businesses (BH Reinsurance, General Re, GEICO etc.) owned by Berkshire have naturally provided plenty of "float" for their investments over time and continue to do so.

See page 106 of the annual report for a full list of Berkshire's businesses.

There'll be more details on all the above in Berkshire's annual report which is to be released later this month.

Adam

Long positions in BRKb, KO, WFC, AXP, PG, KFT, JNJ, and INTC established at lower than recent market prices.

* All values based upon yesterday's closing price. Naturally, what was actually paid can't be known from the information disclosed.
** Berkshire Hathaway's holdings of ADRs are included in the 13F-HR. What is not included are the shares listed on exchanges outside the United States. The status of those shares (BYD, POSCO, Sanofi, Tesco PLC etc.) are updated in the annual letter. Last month, Berkshire disclosed a substantial increase to their position in Britain's dominant supermarket chain, Tesco PLC (TSCDY). So even if that increase had occurred in 4Q 2011, stocks like Tesco PLC are not covered in the 13F-HR unless Berkshire happens to buy the ADR. Investments in things like preferred shares (and related warrants) are also not included in the 13F-HR.
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