Wednesday, May 16, 2012

Berkshire Hathaway 1st Quarter 2012 13F-HR

The Berkshire Hathaway (BRKa1st Quarter 2012 13F-HR was released yesterday.

For comparison purposes here's the 4th 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 previous Berkshire Hathaway 13F-HR.

Here's what changed during the 1st quarter:*

New Positions
General Motors (GM): Bought 10 million shares worth $ 222 million
Viacom (VIA-B): 1.6 million shares worth $ 75 million

Considering the small size both new positions are likely to be shares bought by one of the two portfolio managers (Todd Combs or Ted Weschler).

Added to Existing Positions
IBM (IBM): Bought 490 thousand shares worth $ 97.5 million (1% increase), total stake $ 12.8 billion
DirecTV (DTV): 2.65 million shares worth $ 124 million (13% increase), total stake $ 1.08 billion
Wells Fargo (WFC): 10.6 million shares worth $ 343 million (3% increase), total stake $ 12.7 billion
BNY Mellon (BK): 3.8 million shares worth $ 81 million (213% increase), total stake $ 118 million
DaVita (DVA): 3.3 million shares worth $ 273 million (+124%), total stake $ 493 million
Liberty Media (LMCA): 1.3 million shares worth $ 137 million (+76%), total stake $ 253 million
Wal-Mart (WMT): 7.67 million shares worth $ 455 million (+20%), total stake $ 2.77 billion

In the 1st Quarter of 2012, there was at least something purchased but kept confidential. The filing says: "Confidential information has been omitted from the Form 13F and filed separately with the Commission."

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.

A look at the cash flow statement from the most recent 10-Q reveals that over $ 3.4 billion of equity purchases were made in the 1st quarter.

The total of the above purchases equals only an estimated $ 1.5 billion. That means roughly $ 1.9 billion of another new purchase or purchases (ie. equities that sell on exchanges outside the U.S. or mystery purchases/confidential trades inside the U.S.) were transacted by Berkshire Hathaway during 1st quarter 2012 that have yet to be disclosed.

Reduced Positions
Verisk (VRSK):  Sold 1.2 million shares worth $ 59 million (35% decrease), total stake now $ 109 million
Intel (INTC): 3.75 million shares worth $ 101 million (33% decrease), total stake $ 208 million
Kraft (KFT): 9 million shares worth $ 350 million (10% decrease), total stake now $ 3.03 billion
Dollar General (DG): 860 thousand shares worth $ 40 million (19% decrease), total stake now $ 170 million
Procter & Gamble (PG): 3.5 million shares worth $ 224 million (5% decrease), total stake now $ 4.7 billion
Ingersoll-Rand (IR): 600 shares worth ~$ 26,000 (hardly worth noting), total stake now $ 27.2 million
U.S. Bancorp (USB): 100 shares (yes, 100) worth ~$ 3,000 (also hardly worth noting in a portfolio this size), total stake now $ 2.16 billion.

Sold Positions
It appears the very small stake in Comdisco (CDCO) has been sold outright.

Todd Combs and Ted Weschler are responsible for a portion of Berkshire's portfolio. As I mentioned above, any changes involving the smaller positions will generally be the work of the new portfolio managers.

The total value of reduced and sold positions was under $ 1 billion during the quarter according to the 10-Q.

Top Five Holdings
After the changes, Berkshire Hathaway's portfolio of equity securities is made up of ~ 34% financials, 30% consumer goods, 18% technology, and 8% consumer services. The remainder is primarily spread across healthcare, industrials, and energy.

1. Coca-Cola (KO) = $ 15.3 billion
2. IBM (IBM) = $ 12.8 billion
3. Wells Fargo (WFC) = $ 12.7 billion
4. American Express (AXP) = $ 8.8 billion
5. Procter and Gamble (PG) = $ 4.7 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 that brings the total portfolio value to somewhere north of $ 175 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 101 of the annual report for a full list of Berkshire's businesses.

Adam

Long positions in BRKb, KO, WFC, AXP, PG, USB, WMT, KFT, 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 are updated in the annual letter. So the only way any of the stocks listed on exchanges outside the U.S. will show up in the 13F-HR is if 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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